Moody's to assess impact of Pak conflict in India's rating evaluation

New Delhi, Jun 5 (PTI) Moody's Ratings will consider India-Pakistan conflict while evaluating India's rating, a source said.

Representatives from the US-based rating agency on Thursday met India's finance ministry officials.

Moody's currently has the lowest investment grade rating for India at "Baa3" with a stable outlook.

"The rating agency will consider India-Pakistan conflict in its sovereign rating assessment," a source said.

Last month, Moody's had said escalation of tensions between India and Pakistan will not have any major economic disruption in the country, but will be a setback for Islamabad as its forex reserves could come under pressure and weigh on growth.

It does not expect major disruptions to India's economic activity because it has minimal economic relations with Pakistan (less than 0.5 per cent of India's total exports in 2024).

However, Moody's had last month revised India's GDP growth projections for 2025 to 6.3 per cent, from 6.5 per cent, saying economies globally will see a slowdown on account of heightened US policy uncertainty and trade restrictions.

Geopolitical stresses, like tension between India and Pakistan, also have a potential downside risk to its baseline growth forecasts.

Costs to investors and businesses are likely to rise as they factor in new geopolitical configurations when deciding where to invest, expand, and/or source goods, Moody's had said.

On April 22, Pakistan-trained terrorists killed 26 people in Pahalgam, Kashmir. India has consistently held that Pakistan has given safe haven to designated terrorists and the same was evident when senior military officials were present at the funeral of the terrorists killed in Indian military attacks of May 7.

Moody's has a 'Caa2' rating on Pakistan, which means the debt issued by the sovereign is of poor quality with very high default risks. PTI JD TRB