Moody’s Investors Service on Friday trimmed its FY21 growth projection sharply to 0 per cent for India in the wake of the Covid-19 outbreak and warned of a possible rating downgrade for the country if fiscal metrics “weaken materially”.
The global rating agency had in November 2019 revised down its outlook for India from stable to negative, although its sovereign rating of Baa2 is still a notch above those of S&P and Fitch — both the rating agencies have assigned the lowest investment grade to India, with a stable outlook.
In its latest credit opinion, Moody’s said: “This would probably happen in the context of a prolonged or deep slowdown in growth, with only limited prospects that the government would be able to restore stronger output through economic and institutional reforms.”
Moody’s warning follows a similar statement by Fitch and is expected to add to policy-makers’ unease, as they firm up a relief package to prop up the economy.
Already, several analysts have warned of a negative growth for the entire fiscal, amid a nation-wide lockdown. Manufacturing and services activities have witnessed unprecedented contraction in April, as per the PMI survey. Unemployment rate surged to as much as 27.1 per cent in the week through May 3, according to the Centre for Monitoring of Indian Economy. Moody’s, however, expects GDP growth to recover to 6.6 per cent in FY22.
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