Lockdown: Moody's cautions of rating downgrade for India

NEW DELHI: In a grim picture for the Indian economy, Moody's Investors Services has cautioned that India's sovereign rating may be downgraded in case its fiscal metrics weaken materially.

Currently, the sovereign rating assigned to India by Moody's is 'Baa2' with a negative outlook.

In a report, Moody's has also projected zero per cent growth for the Indian economy in the financial year 2020-21. In the financial year 2022, however, the GDP is projected to grow at 6.6 per cent, it said.

Noting that an upgrade in the near term is unlikely it said that a downgrade may take place in case of a prolonged slowdown in growth, with limited prospects of the government being able to restore output through economic and institutional reforms.

"A marked and long-lasting weakening in the health of the financial sector would both raise associated fiscal costs should the government need to support some financial institutions, and increase the risk that growth remained too low to prevent a rise in the debt burden," it said.

Regarding the current rating of aBaa2 negative' outlook, the report said that it reflects increasing risks that economic growth will remain significantly lower than in the past. (IANS)