India – In a statement affirming its Baa3 rating on India, Moody’s had made note of “the curtailment of civil society and political dissent” and “rising sectarian tensions” and even mentioned the ongoing unrest in Manipur.
In addition to domestic political flare-ups, Moody’s has also flagged the geo-political risks India faces from border skirmishes with Pakistan and China.
Moody’s Investors Service has defended its decision to comment on India’s political risks while affirming its rating on India, saying it had to do so as its underlying assessment of the same had changed. In an interview to Moneycontrol, Christian de Guzman, a senior vice president and the primary analyst for India, said Moody’s assessed political risks – domestic and geopolitical – as well as social risks for every country it rates.
“We highlighted this in our statement because our views on domestic political developments did lead to a change in our underlying assessment of political risk. If nothing had changed, we wouldn’t be highlighting it,” de Guzman said.
Moody’s affirmed its Baa3 rating on India and maintained the stable outlook. However, it noted that “curtailment of civil society and political dissent, compounded by rising sectarian tensions, support a weaker assessment of political risk and the quality of institutions”, citing the ongoing violence in Manipur as an example.
According to de Guzman, these current events had to be mentioned because Moody’s had changed its assessment of political risk in India.
On 3 May 2023, ethnic violence erupted in India’s north-eastern state of Manipur between the Meitei people, a majority that lives in the Imphal Valley, and the Kuki tribal community from the surrounding hills. As of 29 July, 181 people have been killed in the violence. Wikipedia
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