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Large stimulus may attract sovereign rating downgrade, say experts

Debt of Centre and states combined is over 70% of GDP already; country is currently just a notch above junk

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Sme of the fiscal concerns can be addressed by the rise in taxes on petrol and diesel. For now, the extra cost is to be incurred by the oil marketing companies

Anup Roy Mumbai

5 min read Last Updated : May 09 2020 | 11:42 PM IST

The markets are eagerly awaiting a stimulus package from the government, but are also trying to second-guess if the resultant fiscal deficit widening would adversely affect the country rating.

A country rating is important for everybody concerned. Borrowing costs in the overseas markets, both for the country, and the firms from that country get impacted if the sovereign rating is tweaked. Global rating agency S&P and Fitch have India’s ratings at BBB-, one notch above junk. But Moody’s has India’s rating at Baa2, which is one notch above its equivalent in S&P and Fitch. Moody’s had lowered India’s rating outlook

Topics : Fiscal stimulus Sovereign credit profile India's sovereign rating India’s sovereign bonds

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