MUMBAI, NOV 17: The United States-based global credit rating agency Moody's has expressed confidence in the re-elected coalition government saying that it has a fresh opportunity to undertake market-oriented adjustments at the start of an apparently longer term in office. Moody's has taken a different view from Standard & Poor's, another global rating firm, which on Tuesday said India's economic prospects were limited."The increased probability of accelerated economic reforms was part of Moody's reasoning in raising the outlook to positive on the country's Ba2 ratings last month," Moody's Investors Service said in its latest annual report on India released in New York on Wednesday. The rating agency said that greater emphasis is required on the pace of Indian economic reform rather than its path.However, S&P has said India's strong political consensus in favour of weak reforms is limiting the country's economic prospects. It said poor education and health, along with profound challenges to India'sidentity from movements based on caste and religion, will continue to complicate governance in coming years. ``Structural reforms in the private sector have outpaced those in the public sector. Despite impressive progress in recent years, successive governments have failed to address the weakness of public finances, even as they have liberalised the private sector," S&P said.However, Moody's has expressed concern on India's large trade and current account deficits, which have increased its dependence on potentially volatile capital inflows, might widen further in the near to medium term. "The enhanced political stability will be crucial to reinforce these efforts and to maintain the reform momentum over the next several years," the leading international rating agency said.According to Moody's sovereign analysts, additional explanations for renewed optimism derive from the country's ability to withstand the emerging markets crises and nuclear sanctions of last year, as well as the improved maturitystructure of its external debt."Signs that industrial growth is recovering after three years of weak performance indicate that corporate restructuring is paying off, especially in the private sector where companies are focusing increasingly on their core competence," the Moody's report said.The report pointed out the troublesome structural challenges that constrain India's rating, particularly the heavy public debt and debt service burden, labor market and bureaucratic rigidities.
