Oil prices seen as major risk to Indian economy: Moody’s

Business News, Nation, (New Delhi), July 4:-Credit rating agency Moody’s in a recent survey has predicted that oil prices, government’s recapitalization package, financing conditions and competition in the telecom sector are amongst the major risk factors for the Indian economy.

As per the Moody’s Investors Service, the market participants, who responded to a Moody’s poll in Singapore and Mumbai, see high oil prices as the main risk to India’s economy.

“When asked about the top risks facing the Indian economy, most of the respondents highlighted high oil prices as the top risk, while 30.3 percent of those in Singapore picked rising interest rates as the next top risk, and 23.1 percent of those in Mumbai picked domestic political risks as the second top risk,” said Joy Rankothge, a Moody’s Vice President and Senior Analyst.

Earlier in June 2018, Moody’s held its 4th Annual India Credit Conference in Mumbai and Singapore with its Indian affiliate ICRA Ltd.

In both locations, most attendees said they believed that India would not meet the central government’s fiscal deficit target of 3.3 percent of GDP for the fiscal year ending March 2019.

Only 23.3 percent of the respondents in Singapore and 13.6 percent in Mumbai thought that the fiscal targets would be achieved, with 84.7 percent in Mumbai and 76.7 percent in Singapore expecting some fiscal slippage.

The audiences in both Singapore (85.7%) and Mumbai (93.6%) thought that the government’s bank recapitalization package is mostly insufficient to resolve solvency challenges. At the same time, while 59.6 percent of the attendees in Mumbai thought that banks will be unable to raise capital from markets as planned, only 32.1 percent thought so in Singapore.

Conversely, 53.6 percent of attendees in Singapore thought that the recapitalization amount was insufficient even if capital was raised via markets, while only 34 percent thought so in Mumbai.

-(NAV, Inputs: Agencies)





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