Here are the rating agencies' forecasts on India in the last 2 months

Fitch revises India's sovereign rating outlook to negative from stable

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Today, Fitch Ratings has revised the outlook on India's sovereign ratings to negative from stable but retained the ratings at the lowest investment grade. Fitch expects economic activity to contract by five per cent in the current financial year from the strict lockdown measures imposed since 25 March 2020, before rebounding by 9.5 per cent during the next year. The rebound will mainly be driven by a low-base effect.

S&P retains India's sovereign rating at 'BBB-'; keeps outlook stable

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S&P on June 10, retained India's sovereign rating at 'BBB-' with a stable outlook, saying that while risks to growth are rising, the economy and fiscal position will stabilise and begin to recover from 2021 onwards.India's long-term rating was affirmed at 'BBB-' with a stable outlook while the short-term rating was held at 'A-3'. S&P has forecast India's economy to shrink by 5 per cent this fiscal.

Moody's downgrades India's ratings to Baa3; maintains negative outlook

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Moody’s Investors Service (Moody’s) On June 2nd, has downgraded the Government of India's foreign-currency and local-currency long-term issuer ratings to Baa3 from Baa2. The rating agency has also downgraded India's local-currency senior unsecured rating to Baa3 from Baa2, and its short-term local currency rating to P-3 from P-2. The outlook remains negative.

The negative outlook, according to Moody's, 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.


FY21 GDP to contract 5%; pre-virus level unlikely in next 3 fiscals: Crisil

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It will really be a long road to recovery and going back to the pre-Covid-19 gross domestic product (GDP) rate in India will not be possible for the next three fiscals, says the latest report by Crisil, which expects the Indian economy to contract 5 per cent in fiscal 2021.

With this, research and rating agency has revised its forecast downwards yet again after it slashed the rate of growth on April 28 to 1.8 per cent from its earlier forecast of 3.5 per cent growth.

On May 26th, CRISIL said it expected the current quarter’s GDP to shrink 25 per cent year on year.
Extension in lockdown, higher economic costs and an economic package that lacked muscle are the three key reasons why Crisil has downgraded the GDP forecast now.


Global agency DBRS Morningstar assigns BBB sovereign ratings to India

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Global rating agency DBRS Inc (DBRS Morningstar) on May 22, said it has assigned a 'BBB' sovereign credit rating to India.

As per the rating terminology, A BBB rating means that "the capacity for the payment of financial obligations is considered acceptable. May be vulnerable to future events".

The rating agency said even before the coronavirus outbreak, the Indian economy was experiencing a slowdown with GDP growth declining to a projected 4.9 per cent in 2019-20 fiscal, its slowest pace in the last decade.


Icra expects GDP to contract by 20% in June quarter, 2% fall in FY21

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After the government announced graded relaxations in the lockdown, domestic rating agency Icra on May 4th, estimated that the country's GDP might contract by as much as 20 per cent in the June quarter and is expected to overcome some lost ground in the remainder of the year but still close 2020-21 down by up to 2 per cent.

This would mean contraction of 1-2 per cent for entire FY21, against our earlier projection of -1 per cent to 1 per cent, Icra Principal Economist Aditi Nayar said.

The agency's earlier economic forecast was a range, according to which the GDP may either expand by 1 per cent or contract by 1 per cent in 2020-21.


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