High inflation hurting India's sovereign ratings, says Moody's

Moody's Investors Service said, the country's sovereign ratings are constrained by persistently high inflation that is weighing on an otherwise promising economic recovery.

"Recurrent inflationary pressures... Keep domestic capital costs high, erode domestic purchasing power as well as savings and lower international competitiveness," said the rating agency's report that was released on Thursday.

Moody's also said the supply response to inflation had been weak and the government-directed food distribution system had worsened the food supply constraints.

Without a significant increase in food output, the risk from continued inflation could limit India's growth prospects, Moody's said.

(Reuters)