NEW DELHI: Moody’s Investors Service on Friday cautioned that India’s sovereign rating could be downgraded if its fiscal metrics weakens materially.
This follows similar warning from Fitch Ratings. “This would probably happen in the context of a prolonged or deep slowdown in growth, with only limited prospects that the government would be able to restore stronger output through economic and institutional reforms," the rating agency said in its credit opinion.
A marked and long-lasting weakening in the health of the financial sector would both raise associated fiscal costs should the government need to support some financial institutions, and increase the risk that growth remained too low to prevent a rise in the debt burden, Moody's added.