India's position favourable to deal with impact of US tariffs: Moody's

Government initiatives to boost private consumption, expand manufacturing capacity and raise infrastructure spending will help offset the weakening outlook for global demand, the rating agency said in a note on India.

Easing inflation offers the potential for interest rate cuts to further support the economy, even as the banking sector’s liquidity facilitates lending.

Tensions between India and Pakistan would weigh on the latter’s growth more than on the former’s, and Moody’s does not expect major disruptions to India’s economic activity as it has minimal economic relations with Pakistan.

However, Moody’s noted that higher defense spending would potentially weigh on India’s fiscal strength and slow its fiscal consolidation, a news agency reported.

The central government’s infrastructure spending supports GDP growth, while personal income tax cuts bolster consumption. India’s limited reliance on the trade of goods and its robust service sector are mitigants to US tariffs.

Fibre2Fashion News Desk (DS)