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India’s gross domestic product (GDP) growth over the next two years will be challenged by lacklustre global demand and high leverage in some corporate sectors, Moody’s Investors Service has said in its latest Inside India report.
“Growth will be adversely affected by high leverage of some large corporates – which weighs on credit demand, while impaired assets in the banking system negatively affects credit supply,” said Marie Diron, a Moody’s Senior Vice-President and Manager.
By contrast, India’s medium-term potential will be supported by the gradual implementation of further targeted policy reforms, thereby improving the business environment, state of infrastructure and productivity growth.
This international credit rating agency also said that recent Brexit vote will have limited effect on India’s financial markets.
This is because exports to the UK and the rest of the European Union account for 0.4 per cent and 1.7 per cent of India’s GDP respectively.
Also, India is not significantly exposed to a potential sharp fall in capital flows to emerging markets, according to Moody’s.
It also noted that India has acquired energy assets in Russia to enhance the country’s energy security.
Oil and Natural Gas Corporation Ltd, Oil India Ltd, Indian Oil Corporation Ltd and Bharat Petroleum Corporation Ltd — have signed agreements with OJSC Oil Company Rosneft (Rosneft) to acquire upstream oil and gas assets in Russia.
The PSU oil majors have announced four deals, which together will result in them owning a 49.9 per cent stake in Rosneft’s Vankor field, and a 29.9 per cent stake in Rosneft’s Tass-Yuryakh field. Moody’s estimates that the combined value of the deals will total about $ 5.5 billion, based on recently concluded transactions for the same fields.
The assets can potentially provide the PSU oil majors with an additional crude oil production of 225-250 thousand barrels per day (kbpd), which would be equivalent to about 34 -38 per cent of India's total domestic oil production.