Second Covid wave threatens India's long-term credit rating, warns Moody's

The financial sector could become the main driver of potential risk to the sovereign

Global rating agency Moody’s has said that even as the Indian economy has rebounded quickly from a steep contraction in 2020, the second wave of the pandemic poses a threat for the sovereign rating.

The main risk will come from the financial sector, the rating agency warned on Tuesday.  

“A severe second wave of the coronavirus has increased risks to the outlook with potential longer-term credit implications. Risks to India's credit profile, including a persistent slowdown in growth, weak government finances and rising financial sector risks, have been exacerbated by the shock," Moody's said at a frequently asked question (FAQ)