Moody's downgrade of India's sovereign debt had been on cards for months

In comparative terms, India has been a laggard among Emerging Markets in 2020. The downgrade just makes the task of its economic recovery a little more daunting

The decision of Moody’s to downgrade India’s sovereign debt, both in rupee and forex — from Baa2 to Baa3, the lowest investment grade status — had been on the cards for months, despite hectic behind-the-scenes lobbying by officials to avoid a downgrade. In that sense, it is hardly a shock. Moody's has also downgraded India's local-currency senior unsecured rating from Baa2 to Baa3, and its short-term local currency rating from P-2 to P-3.

The outlook on India's rating would improve to stable if policy actions raise confidence that growth will rise to sustainably higher rates than Moody's projects. However, rising