India's fiscal policy should not "remain beholden" to its sovereign ratings as they do not reflect its strong fundamentals, the Economic Survey for 2020-21 (Apr Mar) has argued.
The Survey slammed global rating agencies, saying they must amend the methodologies they used to arrive at the ratings. "Never in the history of sovereign credit ratings has the fifth largest economy in the world been rated as the lowest rung of the investment grade," the Survey, tabled in Parliament today, said. "Reflecting the economic size and thereby the ability to repay debt, the fifth-largest economy has been predominantly rated AAA. China and India are the only exceptions to this rule," the Survey added.
India's credit profile saw adverse action from two of the three global rating agencies in June once the coronavirus pandemic struck. While Moody's Investors Service downgraded India to Baa3 with a negative outlook, Fitch Ratings lowered the outlook on its BBB rating to negative from stable. Only S&P Global Ratings affirmed its BBB- rating with stable outlook, although it warned that downward pressure on rating could emerge over the one to two years if growth did not "meaningfully recover" from 2021.
Output of eight core industries contracts 1.3pc in December