Rating agency Moody’s Investors Service has upgraded India’s sovereign rating outlook to ‘stable’ from ‘negative’ citing an ebbing of the risks from COVID-19 and the negative feedback between the real economy and financial system.
While it retained India’s rating at Baa3, reflecting the lowest investment grade rating, Moody’s said it expects real GDP to surpass pre-pandemic levels of 2019-20 this year itself, as the ongoing economic recovery is picking up steam with activity upticks broadening across sectors. It expects 2021-22 to record 9.3% growth in GDP, followed by 7.9% next year.
In June 2020, Moody’s had downgraded India’s sovereign rating to Baa3 from Baa2 with a negative outlook. On Tuesday, it said that downside risks to growth from subsequent coronavirus infection waves are mitigated by rising vaccination rates and more selective use of restrictions on economic activity, as seen during the second wave.