Credit ratings agency Moody's on Friday downgraded the outlook for Britain's debt, citing mounting policy challenges amid the Brexit debate.

The agency cut the outlook to negative from stable but kept the debt at the investment-grade Aa2.

The rating agency Fitch had similarly put Britain on "negative watch" in February.

Pointing to "paralysis that has characterized the Brexit-era policymaking process," Moody's said London has "struggled to cope with the magnitude of policy challenges that they currently face."

In addition, Britain's "economic and fiscal strength are likely to be weaker going forward and more susceptible to shocks than previously assumed," Moody's said in a statement.

Britons voted by 52 per cent to leave the European Union in a 2016 referendum, but MPs have been divided over how, when and even if that result should be delivered.

The political wrangling has forced two successive Conservative governments to ask the European Union to delay Brexit three times this year. It is now set for January 31.

Current Tory Prime Minister Boris Johnson hopes the snap election next month will give him a majority in the House of Commons to allow him to ratify his exit terms and finally leave the EU.

"Over the longer term, institutional weakening may also impact the UK's economic strength, through its effect on the investment climate and on the UK's attractiveness to skilled and unskilled foreign labour," Moody's said.

"In recent years, we have already seen the negative impact this can have, and Moody's expects this negative influence will likely endure as the exit process continues and uncertainties persist during the subsequent phase of trade negotiations with the EU and with other nations."

Britain remains highly indebted and this was unlikely to change in the next three to four years, according to Moody's.

Credit ratings agency Moody's on Friday downgraded the outlook for Britain's debt, citing mounting policy challenges amid the Brexit debate. The agency cut the outlook to negative from stable but kept the debt at the investment-grade Aa2.

Credit ratings agency Moody's on Friday downgraded the outlook for Britain's debt, citing mounting policy challenges amid the Brexit debate. The agency cut the outlook to negative from stable but kept the debt at the investment-grade Aa2. The rating agency Fitch had similarly put Britain on "negative watch" in February. Pointing to "paralysis that has characterized the Brexit-era policymaking process," Moody's said London has "struggled to cope with the magnitude of policy challenges that they currently face." In addition, Britain's "economic and fiscal strength are likely to be weaker going forward and more susceptible to shocks than previously assumed," Moody's said in a statement. Britons voted by 52 per cent to leave the European Union in a 2016 referendum, but MPs have been divided over how, when and even if that result should be delivered. The political wrangling has forced two successive Conservative governments to ask the European Union to delay Brexit three times this year. It is now set for January 31. Current Tory Prime Minister Boris Johnson hopes the snap election next month will give him a majority in the House of Commons to allow him to ratify his exit terms and finally leave the EU. "Over the longer term, institutional weakening may also impact the UK's economic strength, through its effect on the investment climate and on the UK's attractiveness to skilled and unskilled foreign labour," Moody's said. "In recent years, we have already seen the negative impact this can have, and Moody's expects this negative influence will likely endure as the exit process continues and uncertainties persist during the subsequent phase of trade negotiations with the EU and with other nations." Britain remains highly indebted and this was unlikely to change in the next three to four years, according to Moody's.

Moody's downgrades Britain debt outlook to negative

Moody's Investors Service on Thursday cut India's ratings outlook to "negative" from "stable", citing increasing risks that growth in Asia's third-largest economy will remain lower than in the past.

Moody's Investors Service on Thursday cut India's ratings outlook to "negative" from "stable", citing increasing risks that growth in Asia's third-largest economy will remain lower than in the past. The outlook partly reflects government and policy ineffectiveness in addressing economic weakness, which led to an increase in debt burden from already high levels, the ratings agency said. The Nifty 50 index fell 0.4% in early trade on Friday, while the rupee weakened to 71.31 against the dollar, versus Thursday's close of 70.965. Moody's retained its foreign and local currency ratings at 'Baa2'. India's economy grew only 5.0% year-on-year between April and June, its weakest pace since 2013, as consumer demand and government spending slowed amid global trade frictions. This prompted a slew of rate cuts by the central bank, while the government rolled out several measures, including a sharp cut in corporate taxes, in a bid to boost growth. "While government measures to support the economy should help to reduce the depth and duration of India's growth slowdown, prolonged financial stress among rural households, weak job creation, and, more recently, a credit crunch among non-bank financial institutions have increased the probability of a more entrenched slowdown," Moody's said. The ratings agency does not expect the credit crunch among non-bank financial institutions to be resolved quickly, it added. After the corporate tax cuts and lower nominal GDP growth, Moody's now expects a government deficit of 3.7% of GDP in the fiscal year ending in March 2020, compared with a government target of 3.3% of GDP.

Moody's cuts India's outlook to 'negative' on economic growth worries

Moody's Investors Service on Friday took rating action on 11 Indian financial institutions (FIs), eight non-financial corporates and eight sovereign-linked Indian infrastructure companies, a day after it changed the outlook on India's Baa2 sovereign rating to negative from stable.

Moody's revised its outlook of six FIs to negative from stable. They are Exim India, HDFC Bank, Hero FinCorp, Housing and Urban Development Corporation, Indian Railway Finance Corporation and State Bank of India. The rating outlooks for Bank of India, Canara Bank, Syndicate Bank and Union Bank of India are maintained at stable.

Separately, Moody's downgraded the long-term counterparty risk assessment and long-term local currency counterparty risk rating of HDFC Bank's Bahrain branch and ICICI Bank's Bahrain Branch to Ba2(cr) from Ba1(cr) and Ba2 from Ba1 to align these ratings with Bahrain's local currency ceilings.

Also for ICICI Bank Bahrain Branch, Moody's downgraded the long-term foreign currency senior unsecured medium-term note programme rating and subordinate medium-term note programme rating to (P)Ba3 from (P)Ba2 to align these ratings with Bahrain's foreign currency bond ceiling.

Besides, Moody's changed the outlook to negative on ratings of eight non-financial corporates. They include Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd, Indian Oil Corporation Ltd, Oil and Natural Gas Corporation Ltd, Oil India Ltd, Petronet LNG Ltd, Infosys Ltd and Tata Consultancy Services Ltd.

Similar action was taken against eight sovereign-linked infrastructure companies. They include NTPC Ltd, NHPC Ltd, National Highways Authority of India, Gail India Ltd, Power Grid Corporation of India Ltd, Adani Green Energy Restricted Group (RG-2) comprising of Wardha Solar (Maharashtra) Pvt Ltd, Adani Renewable Energy Ltd and Adani Transmission Restricted Group.

Moody's Investors Service on Friday took rating action on 11 Indian financial institutions (FIs), eight non-financial corporates and eight sovereign-linked Indian infrastructure companies, a day after it changed the outlook on India's Baa2 sovereign rating to negative from stable.

Moody's Investors Service on Friday took rating action on 11 Indian financial institutions (FIs), eight non-financial corporates and eight sovereign-linked Indian infrastructure companies, a day after it changed the outlook on India's Baa2 sovereign rating to negative from stable. Moody's revised its outlook of six FIs to negative from stable. They are Exim India, HDFC Bank, Hero FinCorp, Housing and Urban Development Corporation, Indian Railway Finance Corporation and State Bank of India. The rating outlooks for Bank of India, Canara Bank, Syndicate Bank and Union Bank of India are maintained at stable. Separately, Moody's downgraded the long-term counterparty risk assessment and long-term local currency counterparty risk rating of HDFC Bank's Bahrain branch and ICICI Bank's Bahrain Branch to Ba2(cr) from Ba1(cr) and Ba2 from Ba1 to align these ratings with Bahrain's local currency ceilings. Also for ICICI Bank Bahrain Branch, Moody's downgraded the long-term foreign currency senior unsecured medium-term note programme rating and subordinate medium-term note programme rating to (P)Ba3 from (P)Ba2 to align these ratings with Bahrain's foreign currency bond ceiling. Besides, Moody's changed the outlook to negative on ratings of eight non-financial corporates. They include Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd, Indian Oil Corporation Ltd, Oil and Natural Gas Corporation Ltd, Oil India Ltd, Petronet LNG Ltd, Infosys Ltd and Tata Consultancy Services Ltd. Similar action was taken against eight sovereign-linked infrastructure companies. They include NTPC Ltd, NHPC Ltd, National Highways Authority of India, Gail India Ltd, Power Grid Corporation of India Ltd, Adani Green Energy Restricted Group (RG-2) comprising of Wardha Solar (Maharashtra) Pvt Ltd, Adani Renewable Energy Ltd and Adani Transmission Restricted Group.

Moody's takes rating action on 12 Indian FIs, 8 corporates, 8 sovereign-linked infra firms

The government's decision to reduce the base corporate tax rate to 22 per cent from 30 per cent as part of stimulus measures to revive slowing economic growth is credit positive for companies because it will enable them to generate higher post-tax incomes, Moody`s Investors Service said on Saturday.&nbsp;

However, it is credit negative for the sovereign as it aggravates mounting risks for the government in meeting its fiscal deficit target.&nbsp;

Among Moody's rated non-financial companies in India, commodity and information technology (IT) services companies will benefit most from the tax rate cut.&nbsp;

"But the degree of strengthening in corporate credit profiles will depend on whether companies reinvest surplus earnings into their businesses, or use them to reduce debt or to boost shareholder returns."

In aggregate, rated non-financial companies in India reported a total pre-tax net income of about 35 billion dollars for the fiscal year ended March 2019. Assuming the earnings of these companies remain unchanged for fiscal 2019, they will save about 3 billion dollars from the tax rate reduction.

"The central government deficit target of 3.3 per cent of GDP in fiscal 2019 already assumes faster economic growth and higher tax buoyancy than we expect," said Moody's.&nbsp;

The July 2019 budget projected total corporate tax revenue of Rs 7.7 lakh crore (about 4 per cent of GDP), and the Finance Minister estimated that the decrease in the corporate tax rate will reduce revenue by about Rs 1.5 lakh crore in the current fiscal year.&nbsp;

As such, the reduction in corporate income tax revenue — even when balanced against the windfall from the recent transfer of central bank surplus reserves, equivalent to about 0.3 per cent of GDP in the current fiscal year — further narrows the fiscal room for manoeuvre.&nbsp;

This assumes that the government does not cut expenditure to offset the revenue loss.&nbsp;

While the reduction brings India's corporate tax rate closer to peers throughout Asia and will support the business environment and competitiveness, a host of cyclical factors — including rural financial stress, weak corporate sentiment and a slow flow of credit in the financial sector — remain headwinds to near-term growth.

"We do not expect the corporate tax rate cut to revive growth such that stronger tax buoyancy compensates for the loss in revenue," said Moody's.

The government's decision to reduce the base corporate tax rate to 22 per cent from 30 per cent as part of stimulus measures to revive slowing economic growth is credit positive for companies because it will enable them to generate higher post-tax incomes, Moody`s Investors Service said on Saturday.

The government's decision to reduce the base corporate tax rate to 22 per cent from 30 per cent as part of stimulus measures to revive slowing economic growth is credit positive for companies because it will enable them to generate higher post-tax incomes, Moody`s Investors Service said on Saturday. However, it is credit negative for the sovereign as it aggravates mounting risks for the government in meeting its fiscal deficit target. Among Moody's rated non-financial companies in India, commodity and information technology (IT) services companies will benefit most from the tax rate cut. "But the degree of strengthening in corporate credit profiles will depend on whether companies reinvest surplus earnings into their businesses, or use them to reduce debt or to boost shareholder returns." In aggregate, rated non-financial companies in India reported a total pre-tax net income of about 35 billion dollars for the fiscal year ended March 2019. Assuming the earnings of these companies remain unchanged for fiscal 2019, they will save about 3 billion dollars from the tax rate reduction. "The central government deficit target of 3.3 per cent of GDP in fiscal 2019 already assumes faster economic growth and higher tax buoyancy than we expect," said Moody's. The July 2019 budget projected total corporate tax revenue of Rs 7.7 lakh crore (about 4 per cent of GDP), and the Finance Minister estimated that the decrease in the corporate tax rate will reduce revenue by about Rs 1.5 lakh crore in the current fiscal year. As such, the reduction in corporate income tax revenue — even when balanced against the windfall from the recent transfer of central bank surplus reserves, equivalent to about 0.3 per cent of GDP in the current fiscal year — further narrows the fiscal room for manoeuvre. This assumes that the government does not cut expenditure to offset the revenue loss. While the reduction brings India's corporate tax rate closer to peers throughout Asia and will support the business environment and competitiveness, a host of cyclical factors — including rural financial stress, weak corporate sentiment and a slow flow of credit in the financial sector — remain headwinds to near-term growth. "We do not expect the corporate tax rate cut to revive growth such that stronger tax buoyancy compensates for the loss in revenue," said Moody's.

Corporate tax reduction is credit positive for companies but increases government's fiscal risks: Moody's

The government will find it difficult to meet the fiscal deficit target of 3.4 per cent in 2019-20 on account on higher spending and low revenue growth, Moody's Investors Service said.

Observing that Indian government's debt is "stubbornly high" as a percentage of GDP, Moody's Investors Service Managing Director, Sovereign Risk Group, Gene Fang said it could be brought down only if the Centre sticks to the fiscal consolidation path.

Deviating from the path laid down in the Fiscal Responsibility and Budget Management (FRBM) Act, the government has pegged the fiscal deficit for the next financial year at 3.4 per cent of GDP, as against the original target of 3.1 per cent.

"While the government's growth assumptions appear reasonable, we think the government will continue to face challenges in meeting its fiscal targets, primarily due to structural increases in spending and difficulties in raising revenue further," Fang told PTI in an interview.

Fang said the 3.4 per cent fiscal deficit target for the year ending March 2020 is wider than expected, largely driven by increased spending to provide income support to small farmers and tax rebates ahead of the general elections in April-May this year.

The Interim Budget for 2019-20 doled out a scheme under which farmers holding up to 2 hectares of land would get an annual payout of Rs 6,000 -- a move intended to benefit about 12 crore farmers, among other measures for middle-class taxpayers.

However, there was a 0.1 per cent slip in the fiscal deficit estimate for the current financial year to 3.4 per cent.

While presenting the Budget, Finance Minister Piyush Goyal had said the government has provided Rs 20,000 crore in 2018-19 and Rs 75,000 crore in 2019-20 for providing income support to farmers, which has led to the slippage in the fiscal deficit.

Asked if India risks a rating downgrade following the breach in fiscal deficit target, Moody's said the country's 'Baa2' rating has a 'Stable' outlook, which indicates a balance of upside and downside risks.

"India's government debt remains stubbornly high as a per cent of GDP, but it's mostly domestically funded with a relatively long dated maturity structure.&nbsp;

India's economic growth also offers the potential to bring debt/GDP down, but only if the medium-term fiscal objectives of the FRBM are realised," Fang said.

As per the FRBM Act, debt-to-GDP ratio was to be brought down to 40 per cent by 2024-25 from 50.1 per cent in 2017-18.

In the 2018-19 Budget, the government had targeted to reduce its debt-to-GDP ratio to 48.8 per cent in 2018-19, 46.7 per cent in 2019-20 and 44.6 per cent in 2020-21, while fiscal deficit as a percentage of GDP was targeted to be reduced to 3.3 per cent, 3.1 per cent and 3 per cent, respectively during the same period.

US-based ratings agency Moody's had in 2017 upped India's rating to Baa2 from Baa3, changing outlook to 'stable' from 'positive', and said that reforms will help stabilise rising levels of debt.

The government will find it difficult to meet the fiscal deficit target of 3.4 per cent in 2019-20 on account on higher spending and low revenue growth, Moody's Investors Service said.

The government will find it difficult to meet the fiscal deficit target of 3.4 per cent in 2019-20 on account on higher spending and low revenue growth, Moody's Investors Service said. Observing that Indian government's debt is "stubbornly high" as a percentage of GDP, Moody's Investors Service Managing Director, Sovereign Risk Group, Gene Fang said it could be brought down only if the Centre sticks to the fiscal consolidation path. Deviating from the path laid down in the Fiscal Responsibility and Budget Management (FRBM) Act, the government has pegged the fiscal deficit for the next financial year at 3.4 per cent of GDP, as against the original target of 3.1 per cent. "While the government's growth assumptions appear reasonable, we think the government will continue to face challenges in meeting its fiscal targets, primarily due to structural increases in spending and difficulties in raising revenue further," Fang told PTI in an interview. Fang said the 3.4 per cent fiscal deficit target for the year ending March 2020 is wider than expected, largely driven by increased spending to provide income support to small farmers and tax rebates ahead of the general elections in April-May this year. The Interim Budget for 2019-20 doled out a scheme under which farmers holding up to 2 hectares of land would get an annual payout of Rs 6,000 -- a move intended to benefit about 12 crore farmers, among other measures for middle-class taxpayers. However, there was a 0.1 per cent slip in the fiscal deficit estimate for the current financial year to 3.4 per cent. While presenting the Budget, Finance Minister Piyush Goyal had said the government has provided Rs 20,000 crore in 2018-19 and Rs 75,000 crore in 2019-20 for providing income support to farmers, which has led to the slippage in the fiscal deficit. Asked if India risks a rating downgrade following the breach in fiscal deficit target, Moody's said the country's 'Baa2' rating has a 'Stable' outlook, which indicates a balance of upside and downside risks. "India's government debt remains stubbornly high as a per cent of GDP, but it's mostly domestically funded with a relatively long dated maturity structure. India's economic growth also offers the potential to bring debt/GDP down, but only if the medium-term fiscal objectives of the FRBM are realised," Fang said. As per the FRBM Act, debt-to-GDP ratio was to be brought down to 40 per cent by 2024-25 from 50.1 per cent in 2017-18. In the 2018-19 Budget, the government had targeted to reduce its debt-to-GDP ratio to 48.8 per cent in 2018-19, 46.7 per cent in 2019-20 and 44.6 per cent in 2020-21, while fiscal deficit as a percentage of GDP was targeted to be reduced to 3.3 per cent, 3.1 per cent and 3 per cent, respectively during the same period. US-based ratings agency Moody's had in 2017 upped India's rating to Baa2 from Baa3, changing outlook to 'stable' from 'positive', and said that reforms will help stabilise rising levels of debt.

Difficult for govt to maintain 3.4% fiscal deficit in FY'20: Moody's

The credit rating agency Moody's Investors Service on Thursday predicted a stable outlook for banks across Asia-Pacific over the next 12 months but warned that operating conditions could become increasingly demanding.

"The banks' creditworthiness will stay broadly stable in 2019 because of the still-healthy economic fundamentals and good credit buffers," said Moody's Vice President Eugene Tarzimanov in a statement.

The agency said the capital, provisions and profits of Asia-Pacific banks guarantee them a sufficient margin to absorb losses, while funding and liquidity will remain stable.

He also highlighted his conviction that government support to these banks will remain strong and that their senior creditors will not be required to pay bailouts, with the exception of Hong Kong.

At the same time, Moody's indicated that GDP growth in the region “has peaked and will moderate,” and that “credit expansion will continue to slow,” with the US-China trade conflict posing a risk for banks.

The agency also warned of the high private sector leverage in many of the regional economies, “exposing banks to the risk of asset quality impairment” as interest rates rise.

It also warned about the exposure of banks to real-estate sector risks despite the fall or moderation of prices, and highlighted loans for sector investment purposes as the greatest risk for banks of Australia, New Zealand, South Korea and Malaysia.

"Overall, the banks will have sufficient buffers against growing risks," said Moody's in the statement where it added that digitization will help "banks scale down their branch networks and lower costs."

The credit rating agency Moody's Investors Service on Thursday predicted a stable outlook for banks across Asia-Pacific over the next 12 months but warned that operating conditions could become increasingly demanding.

The credit rating agency Moody's Investors Service on Thursday predicted a stable outlook for banks across Asia-Pacific over the next 12 months but warned that operating conditions could become increasingly demanding. "The banks' creditworthiness will stay broadly stable in 2019 because of the still-healthy economic fundamentals and good credit buffers," said Moody's Vice President Eugene Tarzimanov in a statement. The agency said the capital, provisions and profits of Asia-Pacific banks guarantee them a sufficient margin to absorb losses, while funding and liquidity will remain stable. He also highlighted his conviction that government support to these banks will remain strong and that their senior creditors will not be required to pay bailouts, with the exception of Hong Kong. At the same time, Moody's indicated that GDP growth in the region “has peaked and will moderate,” and that “credit expansion will continue to slow,” with the US-China trade conflict posing a risk for banks. The agency also warned of the high private sector leverage in many of the regional economies, “exposing banks to the risk of asset quality impairment” as interest rates rise. It also warned about the exposure of banks to real-estate sector risks despite the fall or moderation of prices, and highlighted loans for sector investment purposes as the greatest risk for banks of Australia, New Zealand, South Korea and Malaysia. "Overall, the banks will have sufficient buffers against growing risks," said Moody's in the statement where it added that digitization will help "banks scale down their branch networks and lower costs."

Moody's forecasts stable outlook for Asia-Pacific banks in 2019

Moody&#39;s Investors Service today estimated that India will grow 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST.

&quot;There are some signs that the Indian economy is starting to recover from the soft growth patch attributed to the negative impact of the demonetisation undertaken in 2016 and disruption related to last year?s rollout of the Goods and Service Tax,&quot; it said.

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.

&quot;As we have said before, the bank recapitalisation plan should also help credit growth over time, thereby supporting growth,&quot; Moody&#39;s said.&nbsp;

'There are some signs that the Indian economy is starting to recover from the soft growth patch attributed to the negative impact of the demonetisation undertaken in 2016 and disruption related to last year?s rollout of the Goods and Service Tax,' said Moody's

Moody's Investors Service today estimated that India will grow 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetisation and GST. "There are some signs that the Indian economy is starting to recover from the soft growth patch attributed to the negative impact of the demonetisation undertaken in 2016 and disruption related to last year?s rollout of the Goods and Service Tax," it said. 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. "As we have said before, the bank recapitalisation plan should also help credit growth over time, thereby supporting growth," Moody's said.

India to grow at 7.6% in 2018: Moody's

The World Bank said<a href="http://www.wionews.com/india-news/pm-modi-slams-opposition-for-downplaying-world-bank-report-23490"> today that India is expected to grow </a>over 6.7 per cent in 2017 and likely to register higher growth rate than other major emerging market economies in the next decade.

The World Bank <a href="http://www.wionews.com/business-economy/ease-of-doing-business-indias-rankings-zooms-to-100-in-world-bank-report-up-30-places-23243">said as far as the &quot;big picture&quot; </a>was concerned India has &quot;enormous growth potential&quot;.

&quot;In fact, we expect India to do better than its potential in 2018 and move forward,&quot; he said. India&#39;s growth potential, he said, would be around 7 per cent for the next 10 years,&quot; Ayhan Kose, Director, Development Prospects Group, World Bank, told PTI

Kose said in comparison to India, China&#39;s growth was slowing down with India expected to gradually accelerate despite setbacks in demonetization and Goods and Services Tax (GST).

India needs to step up investment in order to leap ahead of China, Klose said, adding that &quot;improved labor market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India&#39;s prospects&quot;.

&quot;In that context, improving female labour force participation rate is going to be important. Female labour force participation still remains low relative to other emerging market economies. Bringing force right now idle outside of the productive activities will make a huge difference,&quot; Klose told PTI.

India needs to step up investment in order to leap ahead of China, Director, Development Prospects Group, World Bank Klose said.

The World Bank said today that India is expected to grow over 6.7 per cent in 2017 and likely to register higher growth rate than other major emerging market economies in the next decade. The World Bank said as far as the "big picture" was concerned India has "enormous growth potential". "In fact, we expect India to do better than its potential in 2018 and move forward," he said. India's growth potential, he said, would be around 7 per cent for the next 10 years," Ayhan Kose, Director, Development Prospects Group, World Bank, told PTI Kose said in comparison to India, China's growth was slowing down with India expected to gradually accelerate despite setbacks in demonetization and Goods and Services Tax (GST). India needs to step up investment in order to leap ahead of China, Klose said, adding that "improved labor market reforms, education and health reforms as well as relaxing investment bottleneck will help improve India's prospects". "In that context, improving female labour force participation rate is going to be important. Female labour force participation still remains low relative to other emerging market economies. Bringing force right now idle outside of the productive activities will make a huge difference," Klose told PTI.

India's 'growth potential' around 7 per cent for next 10 years: World Bank

The Asian Development Bank(ADB) in its report said South Asia will remain the fastest growing region in Asia Pacific with India projected to grow at 7.3 per cent next year, slower than ADB&#39;s pervious estimate of 7.4 per cent.

The Manila-based ADB said India&#39;s&nbsp;growth will be at a lower rate of 6.7 per cent in 2017 from previous estimate of 7.0 per cent with South Asia growing a tad slowly at 6.5 per cent from earlier forecast of 6.7 per cent this year.

The recovery in the Indian economy &ldquo;is more subdued than assumed earlier due to rising crude oil prices, soft private investment growth, and weather-related risks to agriculture,&rdquo; the ADB said.

ADB raised the growth outlook for Southeast Asia to 5.2 per cent for both this year and in 2018, higher than the September forecasts of 5.0 per cent and 5.1 per cent, respectively.

ADB said the overall growth forecast for South Asia next year would be maintained at 7.0 per cent.

On China, the ADB report said the country is projected to grow at 6.8 per cent this year which is higher than its estimate of 6.7 per cent, however, in 2018, China&#39;s growth could see a dip with the economy growing at 6.4 per cent.

&quot;Developing Asia&#39;s growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development,&quot; ADB chief economist Yasuyuki Sawada said in a report.

The Manila-based ADB said India will growth at a lower rate of 6.7 per cent in 2017 from previous estimate of 7.0 per cent

The Asian Development Bank(ADB) in its report said South Asia will remain the fastest growing region in Asia Pacific with India projected to grow at 7.3 per cent next year, slower than ADB's pervious estimate of 7.4 per cent. The Manila-based ADB said India's growth will be at a lower rate of 6.7 per cent in 2017 from previous estimate of 7.0 per cent with South Asia growing a tad slowly at 6.5 per cent from earlier forecast of 6.7 per cent this year. The recovery in the Indian economy “is more subdued than assumed earlier due to rising crude oil prices, soft private investment growth, and weather-related risks to agriculture,” the ADB said. ADB raised the growth outlook for Southeast Asia to 5.2 per cent for both this year and in 2018, higher than the September forecasts of 5.0 per cent and 5.1 per cent, respectively. ADB said the overall growth forecast for South Asia next year would be maintained at 7.0 per cent. On China, the ADB report said the country is projected to grow at 6.8 per cent this year which is higher than its estimate of 6.7 per cent, however, in 2018, China's growth could see a dip with the economy growing at 6.4 per cent. "Developing Asia's growth momentum, supported by recovering exports, demonstrates that openness to trade remains an essential component of inclusive economic development," ADB chief economist Yasuyuki Sawada said in a report.

India's growth set to be higher than China in 2018: Asian Development Bank

The Central Statistics Office (CSO) today released India&#39;s second-quarter Gross Domestic Product(GDP) figures pegging it at&nbsp;6.3 per cent for the second quarter in July to September period.

Major gains were seen in mining and manufacturing sectors.

&quot;GDP growth has recovered to 6.3% in Q2 from a 3-year low of 5.7% in Q1,&quot; TCA Anant, chief statistician said.

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Government&rsquo;s reforms to push economic growth are working can be seen from that manufacturing has shown robust growth of 7% in Q2 and services at 7.1%. Gross fixed capital formation has increased from 1.6% in Q1 to 4.7% in Q2.
&mdash; Arun Jaitley (@arunjaitley) <a href="https://twitter.com/arunjaitley/status/936221297297653760?ref_src=twsrc%5Etfw">November 30, 2017</a></blockquote>
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India&#39;s GDP figure was at a thirteen-quarter low at 5.7 for the period of April-June.

Earlier, India&#39;s finance minister Arun Jaitley speaking at a seminar had said achieving a 10 per cent GDP growth rate &quot;would be challenging&quot; and will depend on how the world is moving.

India intends to follow the glide path as far as the fiscal deficit, the finance minister had said.

NITI Aayog vice-chairman Rajiv Kumar had said Indian economy during July-September period is likely to grow at 6.2 to 6.3 per cent.&nbsp;

GDP is&nbsp;the value of all goods and services produced over a specific period and is one of the indicators of the health of an economy.

NITI Aayog vice-chairman Rajiv Kumar had said Indian economy during July-September period is likely to grow at 6.2 to 6.3 per cent

The Central Statistics Office (CSO) today released India's second-quarter Gross Domestic Product(GDP) figures pegging it at 6.3 per cent for the second quarter in July to September period. Major gains were seen in mining and manufacturing sectors. "GDP growth has recovered to 6.3% in Q2 from a 3-year low of 5.7% in Q1," TCA Anant, chief statistician said. Government’s reforms to push economic growth are working can be seen from that manufacturing has shown robust growth of 7% in Q2 and services at 7.1%. Gross fixed capital formation has increased from 1.6% in Q1 to 4.7% in Q2. — Arun Jaitley (@arunjaitley) November 30, 2017 × India's GDP figure was at a thirteen-quarter low at 5.7 for the period of April-June. Earlier, India's finance minister Arun Jaitley speaking at a seminar had said achieving a 10 per cent GDP growth rate "would be challenging" and will depend on how the world is moving. India intends to follow the glide path as far as the fiscal deficit, the finance minister had said. NITI Aayog vice-chairman Rajiv Kumar had said Indian economy during July-September period is likely to grow at 6.2 to 6.3 per cent. GDP is the value of all goods and services produced over a specific period and is one of the indicators of the health of an economy.

India's GDP climbs to 6.3 per cent in Q2, recovers from 3-year low

India on Thursday condemned the decision of a Pakistan court to release from house arrest Islamist leader Hafiz Saeed, accused of masterminding attacks on Mumbai in 2008 in which 166 people were killed.

Saeed, co-founder of dreaded militant outfit Lashkar-e-Taiba (LeT), a banned organisation in both India and the United States (US), was put under house arrest in January after years of living freely in Pakistan, one of the sore points in its fraying relationship with the US and India.

Indian foreign ministry spokesman Raveesh Kumar said that the country is outraged that a self-confessed and a United Nations proscribed terrorist was allowed to walk free and continue with his evil agenda while adding that it showcases Pakistan&#39;s &#39;lack of seriousness&#39; in handling issues concerning militancy on its soil.

Meanwhile, anti-Pakistan protest erupted in parts of India to protest the release of Saeed.

India accused Pakistan of sponsoring the attacks through the LeT, which Saeed founded in the 1990s.

Pakistan has denied any state involvement in the attack. It placed the LeT on a list of banned organizations in 2002.

Pakistan frees Hafiz Saeed

A Pakistani court Wednesday ordered the release of one of the alleged masterminds of the 2008 Mumbai attacks which killed more than 160 people, after months of US pressure on Islamabad over its alleged support for militants.

Firebrand cleric Hafiz Saeed, who heads the UN-listed terrorist group Jamaat-ud-Dawa (JuD) and has a $10 million US bounty on his head, will be freed tomorrow after less than a year in detention following the decision by the Lahore High Court, a JuD official said.&nbsp;

&quot;The review board looking into the case... has refused to extend his house arrest as the government failed to provide any evidence against the charges,&quot; a spokesman for the party, Ahmed Nadeen said.

The horror of the Mumbai carnage played out on live television around the world as commandos battled the heavily armed gunmen, who arrived by sea on the evening of November 26, 2008.

It took the authorities three days to regain full control of the city.&nbsp;

JuD, which has operated freely across Pakistan and is popular for its charity work, is considered by the US and India to be a front for Lashkar-e-Taiba (LeT), the militant group blamed for the attack on India&#39;s financial capital.&nbsp;

New Delhi has long seethed at Pakistan&#39;s failure either to hand over or prosecute those accused of planning the attacks, while Islamabad has alleged that India failed to give it crucial evidence.

India has also said there is proof that &quot;official agencies&quot; in Pakistan were involved in plotting the attack -- a charge Islamabad denies.

Analyst and retired Pakistani general Talat Masood told AFP that Saeed is given special treatment by the government &quot;because they think that his organisation was supportive in Kashmir&quot;, the disputed Himalayan territory over which India and Pakistan have fought two of their three wars.

Saeed said later in a video message that he was detained because of his association with Kashmir.

&quot;It&#39;s because of Kashmir that India is after me, but all her efforts have been in vain and Allah has set me free,&quot; he said in the video released by his party&#39;s media team.

&quot;This is a victory for Pakistan&#39;s freedom and God willing Kashmir will also be freed because I&#39;m fighting Kashmir&#39;s case,&quot; Saeed added.

India blames Pakistan for sending militant groups, including LeT, to foment unrest in the part of Kashmir controlled by New Delhi.

However, Masood said the government could seek new reasons to detain Saeed to avoid more international pressure, particularly from Washington, which has been pressuring Pakistan for months over its alleged support for militants including the Taliban in neighbouring Afghanistan.&nbsp;

US President Donald Trump in August accused Pakistan of harbouring &quot;agents of chaos&quot;, and Secretary of State Rex Tillerson said last month that the Washington has made &quot;very specific&quot; requests of Pakistan over militancy.&nbsp;

The US has also made several overtures to Pakistan&#39;s arch-enemy India for closer ties.&nbsp;

Following a brief period of house arrest in 2008, Saeed led a high-profile public life and regularly delivered fiery anti-India speeches.

He was placed under house arrest once more in January this year following years of foreign pressure, prompting demonstrations in several Pakistani cities.

Masood said that his release could see him participate in a general election set to be held sometime next year, adding that if he won a seat in the national assembly that could be &quot;very embarrassing internationally&quot;.

(With AFP inputs)&nbsp; 
&nbsp;

Last week, Moody's has upgraded India?s sovereign ratings to Baa2 from its lowest investment grade (Baa3) for the first time since 2004

India on Thursday condemned the decision of a Pakistan court to release from house arrest Islamist leader Hafiz Saeed, accused of masterminding attacks on Mumbai in 2008 in which 166 people were killed. Saeed, co-founder of dreaded militant outfit Lashkar-e-Taiba (LeT), a banned organisation in both India and the United States (US), was put under house arrest in January after years of living freely in Pakistan, one of the sore points in its fraying relationship with the US and India. Indian foreign ministry spokesman Raveesh Kumar said that the country is outraged that a self-confessed and a United Nations proscribed terrorist was allowed to walk free and continue with his evil agenda while adding that it showcases Pakistan's 'lack of seriousness' in handling issues concerning militancy on its soil. Meanwhile, anti-Pakistan protest erupted in parts of India to protest the release of Saeed. India accused Pakistan of sponsoring the attacks through the LeT, which Saeed founded in the 1990s. Pakistan has denied any state involvement in the attack. It placed the LeT on a list of banned organizations in 2002. Pakistan frees Hafiz Saeed A Pakistani court Wednesday ordered the release of one of the alleged masterminds of the 2008 Mumbai attacks which killed more than 160 people, after months of US pressure on Islamabad over its alleged support for militants. Firebrand cleric Hafiz Saeed, who heads the UN-listed terrorist group Jamaat-ud-Dawa (JuD) and has a $10 million US bounty on his head, will be freed tomorrow after less than a year in detention following the decision by the Lahore High Court, a JuD official said. "The review board looking into the case... has refused to extend his house arrest as the government failed to provide any evidence against the charges," a spokesman for the party, Ahmed Nadeen said. The horror of the Mumbai carnage played out on live television around the world as commandos battled the heavily armed gunmen, who arrived by sea on the evening of November 26, 2008. It took the authorities three days to regain full control of the city. JuD, which has operated freely across Pakistan and is popular for its charity work, is considered by the US and India to be a front for Lashkar-e-Taiba (LeT), the militant group blamed for the attack on India's financial capital. New Delhi has long seethed at Pakistan's failure either to hand over or prosecute those accused of planning the attacks, while Islamabad has alleged that India failed to give it crucial evidence. India has also said there is proof that "official agencies" in Pakistan were involved in plotting the attack -- a charge Islamabad denies. Analyst and retired Pakistani general Talat Masood told AFP that Saeed is given special treatment by the government "because they think that his organisation was supportive in Kashmir", the disputed Himalayan territory over which India and Pakistan have fought two of their three wars. Saeed said later in a video message that he was detained because of his association with Kashmir. "It's because of Kashmir that India is after me, but all her efforts have been in vain and Allah has set me free," he said in the video released by his party's media team. "This is a victory for Pakistan's freedom and God willing Kashmir will also be freed because I'm fighting Kashmir's case," Saeed added. India blames Pakistan for sending militant groups, including LeT, to foment unrest in the part of Kashmir controlled by New Delhi. However, Masood said the government could seek new reasons to detain Saeed to avoid more international pressure, particularly from Washington, which has been pressuring Pakistan for months over its alleged support for militants including the Taliban in neighbouring Afghanistan. US President Donald Trump in August accused Pakistan of harbouring "agents of chaos", and Secretary of State Rex Tillerson said last month that the Washington has made "very specific" requests of Pakistan over militancy. The US has also made several overtures to Pakistan's arch-enemy India for closer ties. Following a brief period of house arrest in 2008, Saeed led a high-profile public life and regularly delivered fiery anti-India speeches. He was placed under house arrest once more in January this year following years of foreign pressure, prompting demonstrations in several Pakistani cities. Masood said that his release could see him participate in a general election set to be held sometime next year, adding that if he won a seat in the national assembly that could be "very embarrassing internationally". (With AFP inputs)

S&P's India ratings remain unchanged, India's economic outlook 'stable'

The ratings agency Moody&#39;s upgraded India&#39;s sovereign credit rating from a BAA3 to a BAA2 on Friday.&nbsp;

The two-rung upgrade came after 13 years.&nbsp;

India was earlier upgraded to a BAA3 in 2004 -- the lowest investment grade.&nbsp;

Moody&#39;s said Friday&#39;s upgrade came about because of the Modi government&#39;s economic and institutional reform.&nbsp;

It cited the Goods and Services Tax, which turns India&#39;s 29 states into a single customs entity.&nbsp;

The GST is expected to push up productivity by removing barriers to inter-state trade.&nbsp;

Moody&#39;s also cited Aadhar, which it is hoped will lead to more effective direct-benefit transfers.&nbsp;

So what will the upgrade bring about?&nbsp;

A credit rating is a barometer of a country&#39;s monetary and regulatory environment.

The higher a country&#39;s rating, the greater the investment in that country should be.&nbsp;

So, simple -- the upgrade should lead to greater FDI inflow into the country.&nbsp;

And greater FDI inflow should lead to a lowering of the cost of capital.&nbsp;

Which in turn should lead to higher growth, since easier access to capital allows companies to borrow and transact more, and therefore grow more.&nbsp;

The upgrade should also push up sentiment in equity markets, thereby pushing up the sensex.&nbsp;&nbsp;

Remember also that the upgrade comes just after ratings agencies Standard &amp; Poor&#39;s and Moody&#39;s downgraded China&#39;s credit rating.&nbsp;

Which means that the money that left China after the downgrade could find its way to India.&nbsp;

The upgrade should lead to greater FDI inflow into the country

The ratings agency Moody's upgraded India's sovereign credit rating from a BAA3 to a BAA2 on Friday. The two-rung upgrade came after 13 years. India was earlier upgraded to a BAA3 in 2004 -- the lowest investment grade. Moody's said Friday's upgrade came about because of the Modi government's economic and institutional reform. It cited the Goods and Services Tax, which turns India's 29 states into a single customs entity. The GST is expected to push up productivity by removing barriers to inter-state trade. Moody's also cited Aadhar, which it is hoped will lead to more effective direct-benefit transfers. So what will the upgrade bring about? A credit rating is a barometer of a country's monetary and regulatory environment. The higher a country's rating, the greater the investment in that country should be. So, simple -- the upgrade should lead to greater FDI inflow into the country. And greater FDI inflow should lead to a lowering of the cost of capital. Which in turn should lead to higher growth, since easier access to capital allows companies to borrow and transact more, and therefore grow more. The upgrade should also push up sentiment in equity markets, thereby pushing up the sensex. Remember also that the upgrade comes just after ratings agencies Standard & Poor's and Moody's downgraded China's credit rating. Which means that the money that left China after the downgrade could find its way to India.

Moody's upgrades India's sovereign credit rating: What does that mean??

Lower taxes and higher public expenditure could widen budget deficit in 2017-18, but steps taken by the government to broaden the tax base and improve spending efficiency would help in narrowing it going forward, US-based rating agency Moody&#39;s said.

In an interview to PTI, Moody&#39;s Investors Service V-P (Sovereign Risk Group) William Foster said the agency believes that the government&#39;s commitment to fiscal consolidation remains and sustained growth would help it reduce the debt burden.

Moody&#39;s had last week raised India&#39;s sovereign rating for the first time in over 13 years, saying growth prospects have improved with continued progress on economic and institutional reforms. The rating was upgraded to Baa2 from Baa3 and rating outlook was changed to stable from positive.

Foster said the upgrade reflects the expectation that continued progress on economic and institutional reforms will enhance India&#39;s high growth potential and its large and stable financing base for government debt and will likely contribute to a gradual decline in the general government debt burden over the medium term.

India&#39;s debt-to-GDP ratio stood at 68.6 per cent and a government-appointed panel has recommended lowering it to 60 per cent by 2023.

&quot;We forecast the general government budget deficit at 6.5 per cent of GDP this fiscal year, similar to the last two fiscal years. Lower government revenues than planned in the Budget and somewhat higher government spending could lead to a deficit somewhat wider than targeted.

&quot;However, over time, measures aimed at broadening the tax base and improving the efficiency of government spending will contribute to a gradual narrowing of the deficit. Together with robust and sustained nominal GDP growth, this would be conducive to a gradual decline in the government debt burden,&quot; Foster said.

Foster, however, added that a material deterioration in fiscal metrics and the outlook for general government fiscal consolidation would put negative pressure on the rating.

General budget deficit includes expenditure incurred and revenue earned by both the Centre and states. &quot;The rating could also face downward pressure if the health of the banking system deteriorated significantly or external vulnerability increased sharply,&quot; he added.

The central government, in Budget 2017-18, had set a target of 3.2 per cent for fiscal deficit, which is the difference between the Centre&#39;s revenue and expenditure, for this fiscal. It would be brought down to 3 per cent next fiscal.

The finance ministry is scheduled to review the deficit target for the current financial year next month as it reassesses revenue mop-up from the recently launched Goods and Services Tax (GST) and PSU disinvestment programme.

The deficit has already touched 91.3 per cent of the target in the first half of the fiscal.

Projecting GDP growth to moderate to 6.7 per cent in the current fiscal, from 7.1 per cent last year, Moody&#39;s said while GST and demonetisation have undermined growth over the near term, growth will rise to 7.5 per cent in 2018-19 as the disruption fades.

According to Foster, the stable outlook denotes that Moody&#39;s does not expect a rating change in the foreseeable future. &quot;There are both positive and negative risks to the economy and India&#39;s credit profile,&quot; Foster added.

His assessment is a material strengthening in fiscal metrics, combined with a strong and durable recovery of the investment cycle, probably supported by significant economic and institutional reforms would be credit positive.

&quot;In particular, greater expectation of a sizeable and sustained reduction in the general government debt burden, through increased government revenues combined with a reduction in expenditures, would put positive pressure on the rating. Implementation of key pending reforms, including land and labour reforms, could put additional upward pressure on the rating,&quot; Foster said.&nbsp;

Moody's had last week raised India's sovereign rating for the first time in over 13 years, saying growth prospects have improved with continued progress on economic and institutional reforms

Lower taxes and higher public expenditure could widen budget deficit in 2017-18, but steps taken by the government to broaden the tax base and improve spending efficiency would help in narrowing it going forward, US-based rating agency Moody's said. In an interview to PTI, Moody's Investors Service V-P (Sovereign Risk Group) William Foster said the agency believes that the government's commitment to fiscal consolidation remains and sustained growth would help it reduce the debt burden. Moody's had last week raised India's sovereign rating for the first time in over 13 years, saying growth prospects have improved with continued progress on economic and institutional reforms. The rating was upgraded to Baa2 from Baa3 and rating outlook was changed to stable from positive. Foster said the upgrade reflects the expectation that continued progress on economic and institutional reforms will enhance India's high growth potential and its large and stable financing base for government debt and will likely contribute to a gradual decline in the general government debt burden over the medium term. India's debt-to-GDP ratio stood at 68.6 per cent and a government-appointed panel has recommended lowering it to 60 per cent by 2023. "We forecast the general government budget deficit at 6.5 per cent of GDP this fiscal year, similar to the last two fiscal years. Lower government revenues than planned in the Budget and somewhat higher government spending could lead to a deficit somewhat wider than targeted. "However, over time, measures aimed at broadening the tax base and improving the efficiency of government spending will contribute to a gradual narrowing of the deficit. Together with robust and sustained nominal GDP growth, this would be conducive to a gradual decline in the government debt burden," Foster said. Foster, however, added that a material deterioration in fiscal metrics and the outlook for general government fiscal consolidation would put negative pressure on the rating. General budget deficit includes expenditure incurred and revenue earned by both the Centre and states. "The rating could also face downward pressure if the health of the banking system deteriorated significantly or external vulnerability increased sharply," he added. The central government, in Budget 2017-18, had set a target of 3.2 per cent for fiscal deficit, which is the difference between the Centre's revenue and expenditure, for this fiscal. It would be brought down to 3 per cent next fiscal. The finance ministry is scheduled to review the deficit target for the current financial year next month as it reassesses revenue mop-up from the recently launched Goods and Services Tax (GST) and PSU disinvestment programme. The deficit has already touched 91.3 per cent of the target in the first half of the fiscal. Projecting GDP growth to moderate to 6.7 per cent in the current fiscal, from 7.1 per cent last year, Moody's said while GST and demonetisation have undermined growth over the near term, growth will rise to 7.5 per cent in 2018-19 as the disruption fades. According to Foster, the stable outlook denotes that Moody's does not expect a rating change in the foreseeable future. "There are both positive and negative risks to the economy and India's credit profile," Foster added. His assessment is a material strengthening in fiscal metrics, combined with a strong and durable recovery of the investment cycle, probably supported by significant economic and institutional reforms would be credit positive. "In particular, greater expectation of a sizeable and sustained reduction in the general government debt burden, through increased government revenues combined with a reduction in expenditures, would put positive pressure on the rating. Implementation of key pending reforms, including land and labour reforms, could put additional upward pressure on the rating," Foster said.

India's budget deficit may rise in FY18, but will improve in years ahead: Moody's

The benchmark The benchmark surged <a href="http://www.wionews.com/world/moodys-upgrades-indias-credit-rating-first-time-since-2004-24407">414 points in early trade as Moody&#39;s upgraded</a> India&#39;s credit ratings.

Nifty also rallied climbing to 10,339.15 in opening trade.&nbsp;

Moody&rsquo;s said the goods and services tax(GST) will &quot;promote productivity&quot;, also forecasting India&#39;s GDP growth to grow at of 6.7 per cent for the fiscal year ended March 2018, with 7.5 per cent in 2019 and &quot;similarly robust&quot; levels from 2019 onward.

The credit agency also raised India&rsquo;s long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3.&nbsp; 
&nbsp;

Nifty also rallied climbing to 10,339.15 in opening trade.?

The benchmark The benchmark surged 414 points in early trade as Moody's upgraded India's credit ratings. Nifty also rallied climbing to 10,339.15 in opening trade. Moody’s said the goods and services tax(GST) will "promote productivity", also forecasting India's GDP growth to grow at of 6.7 per cent for the fiscal year ended March 2018, with 7.5 per cent in 2019 and "similarly robust" levels from 2019 onward. The credit agency also raised India’s long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3.

Sensex surges over 400 points after Moody's India upgrade

Hong Kong on Thursday hit back at a decision by Moody&#39;s to cut its credit rating on the city, which the agency said was becoming increasingly close to mainland China.

The move was announced hours after the firm downgraded China for the first time in almost three decades, citing concerns about its ballooning debt and slowing economic growth.

Moody&#39;s decision came as China tries to clean up a toxic brew of unregulated and risky lending that for years has fuelled the economy&#39;s spectacular growth, though some analysts doubt Beijing&#39;s willingness to quit its debt addiction.&nbsp;

Beijing rejected the cut, saying Moody&#39;s had used an &quot;inappropriate&quot; method to assess the risks facing the economy.

In downgrading Hong Kong, the agency outlined the growing links between the city and the mainland, with banks increasing China-related lending, while its stock market is also linked to bourses in Shanghai and Shenzhen through separate tie-ups.

The city&#39;s involvement in China&#39;s Belt and Road initiative also brings its economy and financial systems closer to the mainland, Moody&#39;s said.

&quot;The downgrade in Hong Kong&#39;s rating reflects Moody&#39;s view that credit trends in China will continue to have a significant impact on Hong Kong&#39;s credit profile due to close and tightening economic, financial and political linkages with the mainland,&quot; it said in a statement.

&quot;The institutional features which grant Hong Kong, at present, a degree of political and economic independence -- together with the SAR&#39;s intrinsic credit strengths -- allow Hong Kong&#39;s rating to exceed that of China. But the two ratings, like the two regions, remain closely linked,&quot; it said.

Moody&#39;s cut Hong Kong from Aa1 to Aa2 but upped its outlook from negative to stable. Earlier it had downgraded China to A1 from Aa3 -- its first since 1989 months after the Tiananmen Square crackdown -- and also increased its outlook to stable from negative. It affirmed the Aa3 rating of Macau and upgraded its outlook to stable from negative.

Hong Kong&#39;s Finance Secretary Paul Chan said Thursday he &quot;strongly disagreed&quot; with the move.

&quot;We are of the view that Moody&rsquo;s has overlooked the sound economic fundamentals, robust financial regulatory regime, resilient banking sector and strong fiscal position that Hong Kong has,&quot; Chan said.

He also said the Belt and Road initiative will help Hong Kong businesses enter new markets, boosting the city&rsquo;s economy, adding China is also a &quot;key source of growth&quot; for the global economy.

Jackson Wong, of Huarong International Securities, told AFP that he did not see the downgrade as necessary and it would have little impact on the city.

&quot;I don&#39;t think it will affect investors&#39; view on Hong Kong because they believe Hong Kong has a strong financial system. As of now the city, in every aspect, is still very strong and I don&#39;t see any deterioration.

Hong Kong is semi-autonomous after it was handed back to China by Britain in 1997. It preserved its financial and judicial systems and enjoys liberties not seen on the mainland.

(AFP)

In downgrading Hong Kong, the agency outlined the growing economic links between the city and Beijing

Hong Kong on Thursday hit back at a decision by Moody's to cut its credit rating on the city, which the agency said was becoming increasingly close to mainland China. The move was announced hours after the firm downgraded China for the first time in almost three decades, citing concerns about its ballooning debt and slowing economic growth. Moody's decision came as China tries to clean up a toxic brew of unregulated and risky lending that for years has fuelled the economy's spectacular growth, though some analysts doubt Beijing's willingness to quit its debt addiction. Beijing rejected the cut, saying Moody's had used an "inappropriate" method to assess the risks facing the economy. In downgrading Hong Kong, the agency outlined the growing links between the city and the mainland, with banks increasing China-related lending, while its stock market is also linked to bourses in Shanghai and Shenzhen through separate tie-ups. The city's involvement in China's Belt and Road initiative also brings its economy and financial systems closer to the mainland, Moody's said. "The downgrade in Hong Kong's rating reflects Moody's view that credit trends in China will continue to have a significant impact on Hong Kong's credit profile due to close and tightening economic, financial and political linkages with the mainland," it said in a statement. "The institutional features which grant Hong Kong, at present, a degree of political and economic independence -- together with the SAR's intrinsic credit strengths -- allow Hong Kong's rating to exceed that of China. But the two ratings, like the two regions, remain closely linked," it said. Moody's cut Hong Kong from Aa1 to Aa2 but upped its outlook from negative to stable. Earlier it had downgraded China to A1 from Aa3 -- its first since 1989 months after the Tiananmen Square crackdown -- and also increased its outlook to stable from negative. It affirmed the Aa3 rating of Macau and upgraded its outlook to stable from negative. Hong Kong's Finance Secretary Paul Chan said Thursday he "strongly disagreed" with the move. "We are of the view that Moody’s has overlooked the sound economic fundamentals, robust financial regulatory regime, resilient banking sector and strong fiscal position that Hong Kong has," Chan said. He also said the Belt and Road initiative will help Hong Kong businesses enter new markets, boosting the city’s economy, adding China is also a "key source of growth" for the global economy. Jackson Wong, of Huarong International Securities, told AFP that he did not see the downgrade as necessary and it would have little impact on the city. "I don't think it will affect investors' view on Hong Kong because they believe Hong Kong has a strong financial system. As of now the city, in every aspect, is still very strong and I don't see any deterioration. Hong Kong is semi-autonomous after it was handed back to China by Britain in 1997. It preserved its financial and judicial systems and enjoys liberties not seen on the mainland. (AFP)

Moody's slashes Hong Kong rating following China cut

India criticised&nbsp;Moody&#39;s&nbsp;ratings methods and pushed aggressively for an upgrade, documents reviewed by Reuters show, but the US-based agency declined to budge citing concerns over the country&#39;s debt levels and fragile banks.

Winning a better credit rating on India&#39;s sovereign debt would have been a much-needed endorsement of Prime Minister Narendra Modi&#39;s economic stewardship, helping to attract foreign investment and accelerate growth.

Since storming to power in 2014, Modi has unveiled measures to boost investment, cool inflation and narrow the fiscal and current account deficits, but his policies have not been rewarded with a ratings upgrade from any of the &quot;big three&quot; global ratings agencies, who say more is needed.

Previously unpublished correspondence between India&#39;s finance ministry and&nbsp;Moody&#39;s&nbsp;shows New Delhi failed to assuage the ratings agency&#39;s concerns about the cost of its debt burden and a banking sector weighed down by $136 billion in bad loans.

In letters and emails written in October, the finance ministry questioned&nbsp;Moody&#39;s&nbsp;methodology, saying it was not accounting for a steady decline in the India&#39;s debt burden in recent years. It said the agency ignored countries&#39; levels of development when assessing their fiscal strength.

Rejecting those arguments,&nbsp;Moody&#39;s&nbsp;said India&#39;s debt situation was not as rosy as the government maintained and its banks were a cause for concern, the correspondence seen by Reuters showed.

Moody&#39;s&nbsp;and one of its lead sovereign analysts, Marie Diron, declined to comment on the correspondence, saying ratings deliberations were confidential. India&#39;s finance ministry did not respond to requests for comment.

Arvind Mayaram, a former chief finance ministry official, called the government&#39;s approach &quot;completely unusual&quot;.

&quot;There was no way pressure could be put on rating agencies,&quot; Mayaram told Reuters. &quot;It&#39;s not done.&quot;

Debt burden, bad loans

India has been the world&#39;s fastest-growing major economy over the past two years, but that rapid expansion has done little to broaden the government&#39;s revenue base.

At nearly 21 per cent of gross domestic product (GDP), India&#39;s revenues are lower than the 27.1 per cent median for Baa-rated countries. India is rated at Baa3 by&nbsp;Moody&#39;s, the agency&#39;s lowest notch for debt considered investment grade.

A higher rating would signify to bond investors that India was more creditworthy and help to lower its borrowing costs.

While India&#39;s debt-to-GDP ratio has dropped to 66.7 percent from 79.5 percent in 2004-05, interest payments absorb more than a fifth of government revenues.

Moody&#39;s&nbsp;representatives, including Diron, visited North Block, the colonial sandstone building in the Indian capital that houses the finance ministry, on Sept. 21 for a discussion on a ratings review.

The atmosphere at the meeting with Economic Affairs Secretary Shaktikanta Das, one of the ministry&#39;s most senior officials, and his team was tense, according to an Indian official present, after Diron had told local media the previous day that a ratings upgrade for India was some years away.

On Sept. 30,&nbsp;Moody&#39;s&nbsp;explained its methodology to Indian officials in a teleconference.

Lobbying for an upgrade

Four days later, the finance ministry sent an email to Diron questioning&nbsp;Moody&#39;s&nbsp;metrics on fiscal strength. The government cited the examples of Japan and Portugal, which enjoy better ratings despite debts around twice the size of their economies.

&quot;Given that countries are on different stages of economic and social development, should countries be benchmarked against a median or mean number (as is done by&nbsp;Moody&#39;s)&quot; the email asked.

In India&#39;s case, &quot;while the debt burden lowered significantly post 2004, this did not get reflected in the ratings&quot;, the ministry argued.

New Delhi urged Diron to look at improvements in the factors - better forex reserves and economic growth - that&nbsp;Moody&#39;s&nbsp;had considered when handing India its last ratings upgrade in 2004.

In a reply the next day, Diron said that, not only was India&#39;s debt burden high relative to other countries with the same credit rating, but its debt affordability was also low.

She added that a resolution to the banking sector&#39;s bad loan problems was &quot;unlikely&quot; in the near-term.

In a last-ditch effort on Oct. 27, Economic Affairs Secretary Das sent a six-page letter to Singapore-based Diron, addressed to&nbsp;Moody&#39;s&nbsp;New York headquarters.

Reiterating points on India&#39;s fiscal strength, Das asked&nbsp;Moody&#39;s&nbsp;for a &quot;better appreciation of the factual position&quot;.

Das dismissed&nbsp;Moody&#39;s&nbsp;concerns on India&#39;s public finances as &quot;unwarranted&quot; and told the agency that there was &quot;scope for further lowering&quot; the political risk perception to &quot;very low&quot;.

&quot;In the light of stable external debt parameters and the slew of reforms introduced in the realm of foreign direct investment, you may like to reconsider your assessment on &#39;external vulnerability risk&#39;,&quot; he wrote.

Moody&#39;s&nbsp;on Nov. 16 affirmed its Baa3 issuer rating for India, while maintaining a positive outlook, saying the government&#39;s efforts had not yet achieved conditions that would support an upgrade.

(Reuters)

Winning a better credit rating on India's sovereign debt would have been a much-needed endorsement of Prime Minister Narendra Modi's regime

India criticised Moody's ratings methods and pushed aggressively for an upgrade, documents reviewed by Reuters show, but the US-based agency declined to budge citing concerns over the country's debt levels and fragile banks. Winning a better credit rating on India's sovereign debt would have been a much-needed endorsement of Prime Minister Narendra Modi's economic stewardship, helping to attract foreign investment and accelerate growth. Since storming to power in 2014, Modi has unveiled measures to boost investment, cool inflation and narrow the fiscal and current account deficits, but his policies have not been rewarded with a ratings upgrade from any of the "big three" global ratings agencies, who say more is needed. Previously unpublished correspondence between India's finance ministry and Moody's shows New Delhi failed to assuage the ratings agency's concerns about the cost of its debt burden and a banking sector weighed down by $136 billion in bad loans. In letters and emails written in October, the finance ministry questioned Moody's methodology, saying it was not accounting for a steady decline in the India's debt burden in recent years. It said the agency ignored countries' levels of development when assessing their fiscal strength. Rejecting those arguments, Moody's said India's debt situation was not as rosy as the government maintained and its banks were a cause for concern, the correspondence seen by Reuters showed. Moody's and one of its lead sovereign analysts, Marie Diron, declined to comment on the correspondence, saying ratings deliberations were confidential. India's finance ministry did not respond to requests for comment. Arvind Mayaram, a former chief finance ministry official, called the government's approach "completely unusual". "There was no way pressure could be put on rating agencies," Mayaram told Reuters. "It's not done." Debt burden, bad loans India has been the world's fastest-growing major economy over the past two years, but that rapid expansion has done little to broaden the government's revenue base. At nearly 21 per cent of gross domestic product (GDP), India's revenues are lower than the 27.1 per cent median for Baa-rated countries. India is rated at Baa3 by Moody's, the agency's lowest notch for debt considered investment grade. A higher rating would signify to bond investors that India was more creditworthy and help to lower its borrowing costs. While India's debt-to-GDP ratio has dropped to 66.7 percent from 79.5 percent in 2004-05, interest payments absorb more than a fifth of government revenues. Moody's representatives, including Diron, visited North Block, the colonial sandstone building in the Indian capital that houses the finance ministry, on Sept. 21 for a discussion on a ratings review. The atmosphere at the meeting with Economic Affairs Secretary Shaktikanta Das, one of the ministry's most senior officials, and his team was tense, according to an Indian official present, after Diron had told local media the previous day that a ratings upgrade for India was some years away. On Sept. 30, Moody's explained its methodology to Indian officials in a teleconference. Lobbying for an upgrade Four days later, the finance ministry sent an email to Diron questioning Moody's metrics on fiscal strength. The government cited the examples of Japan and Portugal, which enjoy better ratings despite debts around twice the size of their economies. "Given that countries are on different stages of economic and social development, should countries be benchmarked against a median or mean number (as is done by Moody's)" the email asked. In India's case, "while the debt burden lowered significantly post 2004, this did not get reflected in the ratings", the ministry argued. New Delhi urged Diron to look at improvements in the factors - better forex reserves and economic growth - that Moody's had considered when handing India its last ratings upgrade in 2004. In a reply the next day, Diron said that, not only was India's debt burden high relative to other countries with the same credit rating, but its debt affordability was also low. She added that a resolution to the banking sector's bad loan problems was "unlikely" in the near-term. In a last-ditch effort on Oct. 27, Economic Affairs Secretary Das sent a six-page letter to Singapore-based Diron, addressed to Moody's New York headquarters. Reiterating points on India's fiscal strength, Das asked Moody's for a "better appreciation of the factual position". Das dismissed Moody's concerns on India's public finances as "unwarranted" and told the agency that there was "scope for further lowering" the political risk perception to "very low". "In the light of stable external debt parameters and the slew of reforms introduced in the realm of foreign direct investment, you may like to reconsider your assessment on 'external vulnerability risk'," he wrote. Moody's on Nov. 16 affirmed its Baa3 issuer rating for India, while maintaining a positive outlook, saying the government's efforts had not yet achieved conditions that would support an upgrade. (Reuters)

India's Modi government pushed Moody's for better credit rating but failed: Reuters

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