New Delhi, May 5 -- India's macroeconomic stability is likely to hold firm even if tensions with Pakistan escalate in the coming days, but an increased defence spending could slow the country's fiscal consolidation, Moody's Ratings said on Monday.

In a report titled 'Sovereign - South Asia', the global ratings agency noted that India's economic fundamentals remain sound, supported by strong public investment and healthy private consumption.

"In a scenario of sustained escalation in localised tensions, we do not expect major disruptions to India's economic activity because it has minimal economic relations with Pakistan (less than 0.5% of India's total exports in 2024)," it said.

"Comparatively, the macroeconomic conditions in India wou...