Moody’s Investors Service on Monday downgraded India’s sovereign credit rating for the first time in more than two decades, saying policymakers will be challenged to mitigate risks of low growth, deteriorating fiscal position and financial sector stress.
Downgrading India’s rating by a notch to “Baa3” from “Baa2” assigned in November 2018, Moody’s estimated India GDP shrinking by 4 per cent —first full fiscal contraction in more than four decades, as the country faces a prolonged period of slower growth.
Accordingly, India’s foreign-currency and local-currency long-term issuer ratings have been downgraded to Baa3 from Baa2. India’s local-currency senior unsecured rating too has been lowered to Baa3 from Baa2, and its short-term local currency rating to P-3 from P-2. The outlook remains negative.