Moody’s Investor Services on Monday downgraded India’s rating one notch to the lowest investment grade (Baa3) with negative outlook.
“The decision to downgrade India’s ratings reflect Moody’s view that the country’s policymaking institutions will be challenged in enacting and implementing policies which which effectively mitigate the risks of a sustained period of relatively low growth, significant further deterioration in the general government fiscal position and stress in the financial sector,” it said.
The rating agency said the negative outlook reflects dominant, mutually-reinforcing, downside risks from deeper stresses in the economy and financial system that could lead to a more severe and prolonged erosion in fiscal strength than Moody’s currently projects.