Strong reserves, stable policy make India standout in emerging markets: Moody's
New Delhi, May 6
India has earned an endorsement from one of the world's top credit rating agencies, with Moody's Ratings placing the nation among the most resilient large emerging market economies over the past five years, which is a recognition that comes at a time when global financial markets remain on edge over trade tensions and geopolitical uncertainty.
In a recently released report, Moody's said India 'better placed' than most of its emerging market peers to absorb future global shocks, pointing to three pillars that set it apart -- strong foreign exchange reserves, a stable and predictable policy framework, and deep domestic capital markets -- which reduce its dependence on volatile external funding.
Since 2020, emerging markets have been stress-tested repeatedly, it said.
It highlighted the COVID-19 pandemic first, then by the sharpest global inflation surge in decades, followed by aggressive US Federal Reserve rate hikes in 2022, regional banking turmoil in 2023 and renewed tariff pressures in 2025.
Across each of these episodes, Moody's found that India absorbed the turbulence without a sharp rise in funding costs or a loss of access to capital markets, an outcome that eluded several of its peers.
Moreover, the ratings agency noted that India's monetary policy framework has remained clear and consistent, inflation expectations are well anchored and the exchange rate has been allowed to adjust when needed, which is a combination that preserves investor confidence even when external conditions deteriorate.
The report also outlined that India would enter any future period of global stress with buffers that are not just strong, but accessible, a distinction that matters when markets move fast and policy response time is short.
In its own words, deep local markets and sizeable reserves help balance India's reliance on domestic funding, but fiscal space remains a constraint.
The study benchmarked India against a broad peer group, including Indonesia, Mexico, Malaysia, Thailand, Brazil, South Africa, Nigeria, and Turkey --economies that have each faced their own version of post-pandemic stress with varying degrees of success.
— IANS
Reader Comments
Great to see India's resilience being recognized globally! The fact that we didn't panic during Fed rate hikes or tariff tensions shows our economic fundamentals are solid. But, fiscal space concern is real—hope the government focuses on debt management next. Keep it up, India! 🚀
All this 'standout' talk is good for headlines, but I worry about external shocks from trade wars or a global recession. India's domestic market is strong, true, but our export sector is still vulnerable. Moody's should also note we need better ease of doing business at the state level.
Finally some good news amidst all the negativity! India's forex reserves and stable policies are indeed our strength. But why compare us with Turkey or Nigeria? We should be aiming to beat developed economies, not just emerging peers! Jai Hind! 🌟
Moody's is right about our resilience—look at how we managed inflation during COVID and the Ukraine war. But let's not get complacent. RBI needs to keep monitoring, and the government should avoid populist spending before elections. Fiscal discipline is key to sustaining this 'standout' tag.
Having worked in finance, I can say this is a landmark endorsement. Deep capital markets and stable policy mean lower borrowing costs for India—good for infrastructure and jobs. But I wish the article mentioned how we can improve labor reforms to attract more FDI. Still, proud moment! 🏦
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