India’s economy is “quite robust” and has “strong prospects of growth”, said the government on Friday after ratings agency Moody’s Investors Service cut the country’s outlook to negative.
The International Monetary Fund (IMF) and other multilateral lending organisations are positive about India, said the Finance Ministry in a press release, adding the government’s reforms will help the economy.
India’s economy grew only 5 per cent year-on-year between April and June, its weakest pace since 2013, as consumer demand and government spending slowed amid global trade frictions.
The slump prompted a slew of rate cuts by the Reserve Bank of India, while the government rolled out several measures, including a sharp cut in corporate taxes, in a bid to boost growth.
“A prolonged period of slower economic growth would dampen income growth and the pace of improvements in living standards, and potentially constrain the policy options to drive sustained high investment growth over the medium-to long term,” according to Moody’s statement.
The ministry said the government had noted Moody’s outlook, which kept the foreign-currency and local-currency long-term issuer ratings unchanged.
“The Government has undertaken series of financial sector and other reforms to strengthen the economy as a whole. These measures would lead to a positive outlook on India and would attract capital flows and stimulate investments,” it said.
"The fundamentals of the economy remain quite robust with inflation under check and bond yields low. India continues to offer strong prospects of growth in near and medium term."