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Fitch Ratings revises India's sovereign rating outlook to 'negative'

18 Jun 2020 Evaluate
In the wake of COVID-19, global rating agency Fitch Ratings in its latest report has revised India's outlook to 'negative' from 'stable', stating that the coronavirus pandemic has significantly weakened the country's growth prospects for the year and exposed the challenges associated with a high public-debt burden.

The rating agency has revised the outlook on India's long-term foreign-currency issuer default rating (IDR) to negative from stable and affirmed the rating at 'BBB-'. As per the rating agency, economic activity is expected to contract by 5 per cent in the fiscal year ending March 2021 (FY21) due to the strict lockdown measures imposed since March 25, before rebounding by 9.5 per cent in FY22.

Fitch Ratings further noted that its forecasts are subject to considerable risks due to the continued acceleration in the number of new COVID-19 cases as the lockdown is eased gradually. As per the report, it remains to be seen whether India can return to sustained growth rates of 6 per cent to 7 per cent as previously estimated, depending on the lasting impact of the pandemic, particularly in the financial sector.

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