Moody's has once again expressed full confidence in India's economy.
India has remained the strongest economy among emerging markets since 2020 and its large foreign exchange reserves have helped control currency volatility and boost confidence during global shocks. Credit rating agency Moody's Ratings said in its report on emerging markets on Tuesday that India is in a good position to deal with future shocks due to a clear and reliable monetary policy framework, stable inflation expectations and the ability to adjust exchange rates when needed. Moody's said that India is in a better position among emerging countries and the country will maintain strong security in times of any tension in future.
The rating agency said India's dependence on domestic funding is balanced by the strength of local markets and good reserves. However, India's relatively high debt burden and weak fiscal balance continue to limit the space available to deal with shocks. It said that even before the recent pressure, India had taken important policy decisions to support stability. Moody's said many major emerging economies have weathered several major global shocks over the past five years without increasing risk appetite and without losing rapid growth or market access. This reflects sustainable improvements in the policy framework, safeguards and favorable external conditions.
Moody's assessed the resilience of emerging economies to volatile financial conditions based on their funding costs and market access. It focused on large emerging market countries like India, Indonesia, Mexico, Malaysia, Thailand, Brazil, South Africa, Nigeria, Turkey and Argentina. Also four rounds of pressure were analyzed. These include the onset of the COVID-19 pandemic in early 2020, a surge in global inflation in 2022 and the associated tight monetary policy stance of the US Federal Reserve, a US regional banking crisis in early 2023, and renewed tariff pressures in 2025.
