[Asia Economy Reporter Jeong Hyunjin] Credit rating agency Moody's announced on the 1st (local time) that it has downgraded India's sovereign credit rating from 'Baa2' to 'Baa3'. Baa3 is the lowest rating within the investment-grade category.
According to major foreign media, Moody's stated in a press release that it is downgrading the sovereign credit rating due to concerns over the Indian government's policies to overcome fiscal deterioration and economic slowdown. Moody's pointed out that vulnerabilities in the Indian economy existed even before the impact of the novel coronavirus disease (COVID-19).
Moody's also maintained the rating outlook as 'negative', the same as before, considering the economic downturn risks India faces, explaining that there are concerns about more severe and prolonged fiscal deterioration than expected.
India recorded an economic growth rate of 3.1% in the first quarter, marking the lowest quarterly growth in eight years. India failed to meet its fiscal deficit reduction target for the fiscal year ending last March, and fiscal deterioration is expected to be inevitable in the 2020 fiscal year due to the impact of COVID-19.
Earlier, other credit rating agencies S&P and Fitch also downgraded India's credit rating to 'BBB-', the lowest rating within the investment-grade category.
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