Due to the Covid 19 outbreak and the subsequent lockdown to contain its spread, global ratings firm Fitch said weaker growth puts India's sovereign rating of BBB- in threat. Also, the agency sharply cut its growth forecast for the ongoing financial year 2020-21 from 5.6% in December to 0.8%.
"Further deterioration in the fiscal outlook as a result of lower growth or fiscal easing could pressure the sovereign rating in light of the limited fiscal headroom India had when it entered this crisis," Fitch said.
Also, the agency expects another round of fiscal stimulus that has been limited to deal with the challenged posed by the current crisis.
In its debt to GDP estimate it expects that it would reach 77% in FY21 as against its previous estimate of 70% in December and the trend will continue through the next year.
India's relatively robust external position supports its sovereign rating, and has helped to offset its comparatively weaker fiscal metrics," Fitch said.
On the sidelines, Moody's Investors Service revised its growth forecast for India for the calendar year from 2.5% estimated in March to just 0.2% for the current calendar year.
Thus, India, China and Indonesia are counted to be among nations that will show positive growth during the corona crisis.