Why did moody's downgrade India's rating?

Why did moody's downgrade India's rating?

Why did moody's downgrade India's rating?

A report by global rating agency moody's downgrading India's outlook to negative from stable has sent a shockwave through business and economic circles. 



Why did moody's downgrade India's rating

Key Reasons for the moody's downgrades 

  1. Moodys downgraded India rating because of Slowdown in growth 
  2. GDP of India has fallen from 8% to 5 percent in just 5 quarters
  3. India tax collection ability is going down after GST implementation
  4. The government will not meet its fiscal deficits target due to lower tax collection 
  5. Due to lower tax collection government spending will decrease and it is much more difficult to create new jobs and bring the economy in the growth path 
  6.  The government has done various reforms like GST- bankruptcy and insolvency act - implementation of fiscal responsibility and budget management act but the government is not able to implement these reforms successfully.
  7. Moodys says apart from these reforms the government needs to implement labor and land reforms to bring back the growth in-country. These reforms will allow to set up new industries and it will help to created jobs and increase the spendings in the economy.
  8. The government is facing challenges in implementing the reforms. There is a gap between government intention and the outcomes 
  9. Moodys says Government recent reforms like corporate tax reduction - special fundings to housing sectors - will not bring India growth back in track
  10. The Indian government needs to implement reforms like flexible labor law  - the easy availability of land to sep up factories - improve the infrastructure will bring back India's growth to a sustainable rate.  
  11. The climate risk and the environmental risk in India is very high cities like Delhi there are issues like air pollution- water scarcity and overtime if these issues are not addressed it will impact the Indian economy - social welfare - peoples ability  to contribute in full to the workforce as healthy workers will lead in a decrease in productivity and also in consumption which will lead to less foreign investment and domestic investments .
  12. Lower food price increases the stress among the farmers. Framers Income in the ruler area is not increasing which leads to lower consumption of industrial items.
  13. The debt of companies is very high which is increasing the credit crunch situation and can lead to high defaults in banking and NBFC sectors. 
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  1. World stocks nudged downward as Chinese financial data slowed in this October and Germany merely narrowly avoided a depression in the 3rd quarter. The STOXX 600 index was downward 0.2%.? Free Stock Tips

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