Research Update: India 'BBB-/A-3' Rating Affirmed; Outlook Stable

India's economy will experience a record contraction in fiscal 2021 (year ending March 31, 2021), largely owing to the global COVID-19 pandemic. We expect real GDP growth to recover from fiscal 2021 onwards. India's weak fiscal settings will worsen further this year, constraining the government's ability to aid the economy. At the same time, the country's external settings have improved, helped by the central bank's rapid accumulation of foreign exchange reserves. We are affirming our 'BBB-' long-term and 'A-3' short-term foreign and local currency sovereign credit ratings on India. The stable outlook reflects our view that India's contraction in fiscal 2021 will be followed by a significant recovery, which will stabilize the country's broader credit profile. On Sept. 25, 2020,

...- India's economy will experience a record contraction in fiscal 2021 (year ending March 31, 2021), largely owing to the global COVID-19 pandemic. We expect real GDP growth to recover from fiscal 2021 onwards. - India's weak fiscal settings will worsen further this year, constraining the government's ability to aid the economy. At the same time, the country's external settings have improved, helped by the central bank's rapid accumulation of foreign exchange reserves. - We are affirming our '###-' long-term and 'A-3' short-term foreign and local currency sovereign credit ratings on India. - The stable outlook reflects our view that India's contraction in fiscal 2021 will be followed by a significant recovery, which will stabilize the country's broader credit profile....

Research Update