Fitch reduces India’s sovereign rating, says economy will fall by 5%

Fitch reduces India's sovereign rating, says economy will fall by 5%

After Moody’s, Fitch Ratings has also reduced India’s sovereign ratings. The agency has negatively rated India’s rating. The agency has lowered the ratings due to India’s weak growth prospects and the difficulties faced by the dispute with China. The agency says that the weak growth will increase the burden of public debt on the economy. The rating agency has negatively rated India’s rating but has maintained a BBB-rating. This is the lowest rating of investment. Fitch has said that India’s GDP will fall by five percent due to the lockdown. According to the rating agency, India’s growth outlook for this year has become very weak due to coronavirus infection.

Fitch had estimated a growth rate of six to seven percent in India before the coronavirus infection. The rating agency has said that whether India is able to return to the growth rate of six to seven percent or not. Much of this will depend on its ability to control coronavirus infection. It will depend on how long its impact in the financial sector of the country.

Fitch has mentioned its geo-political risk after India’s confrontation with China. However, the government had earlier disagreed with the assessment of Moody’s and two other rating agencies, saying that India deserves a better rating. Chief Economic Advisor K. Moody’s after rating was downgraded. Subramaniam had said that the foundation of the Indian economy is strong and it is fully capable of paying its debts. The Modi government has taken strong steps to deal with the Corona crisis. This will have a positive effect on the economy.