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

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