In a report, he said India’s rapid GDP growth, estimated at 11% on average in nominal terms, is a key driver behind projections of a downward trend in the country’s debt burden.
“As in the past, the primary determinant of fiscal strength and credit profile will be debt affordability and in particular the proportion of revenue absorbed by interest payments,” Moody’s said.
India has a relatively high level of public debt, estimated at around 81.8% of GDP for 2022-23, compared to a Baa-rated median of around 56%.
The country also has a low debt capacity, in terms of general government interest payments as a percentage of revenue, which for India is estimated at 26% for 2022-23, compared to a median Baa of around 8, 4%.
“At 26% currently, this is a significant proportion which, if not further addressed through continued broadening of the revenue base, will remain a significant constraint on the government’s ability to provide further support to growth and meet development needs,” Moody’s said. added. Moody’s has a “Baa3” sovereign credit rating on India, with a stable outlook. Baa3 is the lowest investment grade rating.
Friday, Moody’s must meet with representatives of the Indian government during which they should plead in favor of an increase in the sovereign rating.