NEW DELHI: International rating agency Moody’s Investors Service has maintained a positive outlook on India and said that beyond the shortterm negative impact on growth, demonetisation has the potential to raise government revenues and provide some fiscal space to support growth if required.
“We maintained a positive outlook on India’s (Baa3 positive) rating in November 2016 based on our expectation that economic and institutional reforms will support continued robust growth,” the New York City headquartered agency said in its latest report on Asia-Pacific.
It said measures including relaxation of foreign investment restrictions, passage of the Goods and Services Tax, and advancement of a workable bankruptcy code have potential to stimulate private sector investment, which could lead to stable, balanced growth and gradually lower the government’s debt burden.
The agency said the ongoing implementation of reforms is likely to boost medium-term growth.
The comment was part of wider Asia-Pacific review published in the report ‘Sovereigns — Asia Pacific: 2017 Outlook — Stable Outlook Balances External, Political Risks Against Economic, Institutional Reforms’.
The report said that in the context of downside risks to the global growth outlook and the possibility of faster increases in US interest rates than investors currently assume, capital inflows to emerging markets could taper abruptly.