This rating was upgraded citing reduced risks from COVID-19 as well as negative feedback between real economy & financial system.
Moddy’s has retained India’s rating at Baa3. It reflects the lowest investment grade rating.
Moody’s further expects that real GDP will surpass pre-pandemic levels of 2019-20 in the year 2021 itself. This is because the ongoing economic recovery is picking up as the activity are broadening across sectors.
Moody’s expects that 2021-22 will record a growth of 9.3% in GDP.
As per Moody’s, downside risks on growth because of coronavirus infection waves are lowering because of rising vaccination rates and selective use of restrictions on economic activity. Furthermore, higher capital cushions and greater liquidity highlights that banks & non-bank financial institutions have a lesser risk to the sovereign now.
