Fitch revises India’s outlook to negative from stable, affirms IDR at BBB-
New Delhi: Fitch Ratings on Thursday revised India’s outlook to ‘detrimental’ from ‘secure’, owing to coronavirus pandemic that has ‘considerably weakened’ the nation’s progress prospects for the yr.
“Fitch Ratings 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-‘,” the score company stated.
It added that the coronavirus pandemic has considerably weakened India’s progress outlook for this yr and uncovered the challenges related to a excessive public-debt burden.
Fitch stated that it expects financial exercise to contract by 5% within the fiscal yr ending March 2021 (FY21) from the strict lockdown measures imposed since 25 March 2020, earlier than rebounding by 9.5% in FY22.
“The rebound will mainly be driven by a low-base effect. Our 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. It remains to be seen whether India can return to sustained growth rates of 6% to 7% as we previously estimated, depending on the lasting impact of the pandemic, particularly in the financial sector,” Fitch stated in its report.
The score company stated that it expects normal authorities debt to leap to 84.5% of GDP in FY21 from an estimated 71.0% of GDP in FY20.
“This is significantly higher than the median of 42.2% of GDP for the ‘BBB’ category in 2019, to which FY20 corresponds, and 52.6% for 2020. The medium-term fiscal outlook is of particular importance from a rating perspective, but is subject to great uncertainty and will depend on the level of GDP growth and the government’s policy intentions,” it stated.
It could also be recalled that score company Moody’s earlier this month downgraded India’s sovereign score by a notch to lowest funding grade of ‘Baa2’ for the primary time in 22 years.
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