The decision by rating agency Moody’s to change its outlook on India from stable to negative was a mistake, since the country is enjoying “incredible” growth compared to many other states, veteran investor Mark Mobius has said.
“I think Moody’s call was erroneous, I don’t think it was called for because I see tremendous growth coming in India going forward,” Mobius, the emerging markets fund manager and founding partner of Mobius Capital Partners LLP, told CNBC. “I believe that a lot of the reforms are going to really begin to kick in and have a big impact on the economy going forward.”
Last week, Moody’s explained its decision to lower India’s outlook by what is sees as lower government and policy effectiveness in addressing “economic and institutional weaknesses.” New Delhi was quick to point out that the country is one of the fastest growing major economies in the world.
India’s GDP grew by five percent between April and June, which is three percent lower than in the same period last year. However, these figures are impressive enough in the current situation in the global economy, Mobius said in an earlier interview.
“When we talk about slowdown, five percent growth is incredible when you compare with what is happening in other parts of the world,” he told CNBC-TV18’s Manisha Gupta. He noted that the ratings agency could have been “too sensitive” to the idea that India is set to slow down, adding that he does not believe this.
Indian Prime Minister Narendra Modi has recently set an ambitious target of becoming a $5 trillion economy in the next five years. Initially, many doubted that the $5 trillion goal could be achieved, with falling demand and India’s multi-sector slowdown only causing more concerns.
There are still issues that the south Asian power needs to address to support its growth, according to the legendary investor. For example, the country should improve infrastructure to create the ability to grow and export; and issue bonds, including in foreign currency.
Mobius stressed that India and China are among the countries that are driving the growth of the emerging markets and that trend is unlikely to change any time soon.
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