Fitch Ratings has downgraded India's long-term foreign currency issuer default rating (IDR) from stable to negative, citing an escalated risk to the economy because of the COVID-19 pandemic.
"Our forecasts are subject to considerable risks due to the continued acceleration in the number of new COVID-19 cases as the lockdown is eased gradually. It remains to be seen whether India can return to sustained growth rates of 6% to 7% as we previously estimated, depending on the lasting impact of the pandemic, particularly in the financial sector", the ratings agency said in a statement.
India's economic activity is likely to contract by 5 percent in the current fiscal year ending March 2021 before rebounding by 9.5% the next year, the agency added.
Earlier this month, another rating agency Moody’s maintained a negative outlook for the country due to worsening fiscal conditions against the backdrop of the coronavirus pandemic.
Prime Minister Narendra Modi has claimed that the economy is looking up as the COVID-19 recovery rate in India is now "over 50 percent", suggesting that the “coronavirus has not assumed as life threatening a form as in the rest of the world".
"Rise in power consumption, which was earlier falling, fertiliser sale in May this year is seeing a significant increase, a healthy increase in crop sowing in comparison to last year, production of two wheelers increasing, digital payment in retail reaching pre-lockdown level, increase in toll collection in May, and bouncing back of exports. These signals are encouraging us to forge ahead", the prime minister said.
According to the Indian Ministry of Health and Family Affairs, of the total 366,946 cases, 180,012 people have recovered so far.
India witnessed decade-low growth in the latest data released by the Indian government on 29 May. During the January-March quarter India’s annual national income grew by 3.1 percent, versus 4.7 percent in the October-December 2019 quarter.