Moody’s downgrades India rating for 1st time in 22 yrs
NEW DELHI: Global ratings agency Moody’s Investors Service on Monday downgraded India’s sovereign rating to the lowest investment grade, saying the country’s policy making institutions would be challenged in enacting and implementing policies which mitigate the risks of a sustained period of low growth, significant further deterioration in the government fiscal position and stress in the financial sector.
The downgrade by Moody’s comes nearly 22 years after it lowered India’s rating on June 19, 1998 in the aftermath of the country’s nuclear tests. The lowering of the rating — from Baa2 to Baa3 — brings it on a par with S&P and Fitch which rate India at BBB (minus), the lowest investment grade.
The downgrade comes against the deterioration in the country’s growth prospects as the national lockdown unveiled to stem the spread of the Covid-19 pandemic has stalled economic activity. This has also choked revenues, including those from GST prompting the government to raise its market borrowing sharply which economists say will widen its fiscal deficit to around 5.5% of gross domestic product. Moody’s action is likely to put pressure on the rupee, raise borrowing costs and dampen investor sentiment which is already stretched due to the impact of the pandemic on all major global economies.
“While today's action is taken in the context of the coronavirus pandemic, it was not driven by the impact of the pandemic. Rather, the pandemic amplifies vulnerabilities in India's credit profile that were present and building prior to the shock, and which motivated the assignment of a negative outlook last year,” the agency said.
“Slow reform momentum and constrained policy effectiveness have contributed to a prolonged period of slow growth, compared to India's potential, that started before the pandemic and that Moody's expects will continue well beyond it,” Moody’s said.
The agency said GDP growth has declined from a high of 8.3% in fiscal 2016 (ending March 2017) to 4.2% in fiscal 2019 and expects India's GDP to contract by 4.0% in fiscal 2020 due to the shock from the coronavirus pandemic and related lockdown measures, followed by 8.7% growth in fiscal 2021 and closer to 6.0% thereafter.
It said that thereafter and over the longer term, growth rates are likely to be materially lower than in the past, due to persistent weak private sector investment, tepid job creation and an impaired financial system. The agency said that in turn, a prolonged period of slower growth may dampen the pace of improvements in living standards that would help support sustained higher investment growth and consumption.
I congratulate Modi and his Bhrakts.India has really become 5 trillion dollar economy.Now the next thing he needs to do is convert India into Somalia
Modi promised $5 trillion or $0.5 Trillion? Now bakths need to clarify.
We stand with Modi not Moody! Corrupt credit ratings are worth used toilet paper.
When you have a crazy clueless government trying to run the country what else should we expect?
Rahul Gandhi would be the best person to lead
Definitely, much better than feku
rahul gandhi for PM
While the Indian economy was fragile even before the pandemic, covid-19 just aggravated it.The overall situation is a boon to team Modi, who can now put the blame on an inconspicuous organism.
Feku has ruined the economy. Poor economy will cause massive unemployment; unrest and more crime.
in 22 years. that means congress was doing better since past 16 years if we take away the 6 years of modi government.
Manmohan said Feku would be disastrous for India. How true. Education matters.
All Thanks to feku
It is a tragedy, but India's economy is now finished. The economy is now so badly damaged that even if there is a change of Government, it will take at least 10 years to get back to where we were 10 years ago.
Masterstroke by Modi.
This useless government will spoil india for ever .
how much money bjp invested on times to put all fake news about india doing great. times is an anti indian.
They have to publish atleast one news honestly.
Modi proved he can do in 6 years what congress can't do in 60 years.
African countries like Kenya, Uganda have better GDP growth (%age growth) for 2019-20 than India.
Don't blame corona, credit goes to Modi.
In short this report says PM Modi has failed.