A lower rating on US debt could cost taxpayers if it leads borrowers to demand higher interest rates on Treasury bills and notes.
It said despite the economy's strong potential, there is a risk that the pace of investment in India's manufacturing and infrastructure sectors could slow because of limited economic liberalization or slower policy implementation.
In India, where exports make up relatively small shares of the economy, high commodity prices have boosted the value of exports. This is one factor that helped reinvigorate India after its first devastating wave of COVID-19.
Earlier this month, Moody's had projected India to clock a 9.3 per cent growth in the current fiscal ending March 2022, but a severe second COVID wave has increased risks to India's credit profile and rated entities.
Moody's Investors Service on Thursday upped India growth forecast to (-) 10.6 per cent for the current fiscal, from its earlier estimate of (-) 11.5 per cent, saying the latest stimulus prioritises manufacturing and job creation, and focuses on longer-term growth.
After a long clamour for fiscal stimulus, the government had on October 12 come up with measures with direct fiscal support to people and states and to generate demand.
Moody's Investors Service on Thursday said the coronavirus-triggered global recession will continue to put pressure on non-financial companies in Asia-Pacific, and negative credit trends will persist through the rest of 2020.
Moody's Investors Service on Monday projected the Indian economy to shrink 3.1 per cent in 2020 and said clashes with China on the border also suggest rising geopolitical risks in the Asian region where countries are particularly vulnerable to changes in geopolitical dynamics.
Moody's Investors Service on Tuesday slashed India growth forecast for the calendar year 2020 to 0.2 percent, from 2.5 percent projected in March. For 2021, Moody's expects India's growth to rebound to 6.2 percent.
Moody's Investors Service on Tuesday lowered India's GDP growth forecast for 2020 calendar year to 5.3 per cent, on coronavirus implications on the economy.
In addition, any further distress in the Indian NBFI sector will pose significant downside risks to India's growth outlook.
The Budget for 2018-19 includes some measures that could stabilise the rural economy that was disproportionately hit by the demonetization policy and is yet to recover, it said.
New Delhi, Aug 11: Prime Minister Manmohan Singh today said the downgrade of India's growth forecast by Moody's was a cause of concern but expressed hoped that India would better last year's 6.5 per cent
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