Fitch, a global credit rating agency, cut India’s sovereign credit rating from stable to negative barely two months after Standard & Poor’s (S&P) dealt a similar blow to our sovereign ratings and our national ego. Both the pronouncements cite risks that India’s growth outlook would worsen if ill-governance and policy paralysis continue as they have been in the last couple of years.  The agencies pegged India’s rating at BBB-, the lowest investment grade. Fitch estimated her government debt to be 66% of GDP, a lot higher than the median of 39% of other BBB- rated countries.

 Fitch has also revised the credit ratings of 19 entities in Indian economy that includes six public sector banks, two private sector banks and seven PSUs like NTPC, SAIL, IOC, NHPC etc because of their over-exposure to the sovereign. The banks believe that this rating revision would not impact their ability to borrow overseas funds as it did not affect their stock prices.