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India's sovereign rating downgrade by Moody's - Acuité Ratings & Research

Posted On : 2020-06-01 23:37:59( TIMEZONE : IST )

India's sovereign rating downgrade by Moody's - Acuité Ratings & Research

Sankar Chakraborti, CEO, Acuité Ratings & Research, on the downgrade of India's sovereign rating.

"Moody's decision to downgrade India's sovereign rating to 'Baa3' from 'Baa2' along with a negative outlook, implies a possibility of further downgrade which, if it happens, will take the rating below investment grade. While the impact of the economic slowdown sharply aggravated by the Covid lockdown is indeed severe in the near term, we believe that the global rating agencies should take cognizance of India's resilience through past economic crises since the 1990s, its adequate foreign currency reserves and its institutional and regulatory framework that has strengthened over the past two decades. A near to medium term disruption in the growth as well as the fiscal trajectory precipitated by the Covid crisis is foreseeable but will also need to be looked at on a relative basis vis-à-vis peers who have similar vulnerabilities. While Moody's has expressed its doubt over the longer term growth potential and the policy effectiveness of the measures being taken by the government, we are of the view that the current economic scenario has set the stage for robust economic reforms which will help to weather the current crisis and a reset to the earlier growth trajectory in another 2-3 years."

Source : Equity Bulls