Moody’s sets a very high bar

Moody’s decision to cut its outlook on India’s sovereign rating is based in part on the government’s struggle to rein in the fiscal deficit. This is justifiable if a little behind the curve. But the ratings agency’s decision is also based on its assessment that India is unlikely to sustain real GDP growth of 8%. This is setting an extremely high bar given that only the very best performing economies at India’s stage of development have achieved this over the past few decades.