app magazine news live tv...after moody’s outlook downgrade to ‘negative’ in november 2019,...
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682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 19
MG Arun New Delhi June 6 2020 ISSUE DATE June 15 2020 | UPDATED June 6 2020 1459 IST
E
The loss of faith
Bond credit ratings represent the creditworthiness of corporate or governmentpaper
ADVERTISEMENT
Illustration by Siddhant Jumde
CONOMY
O n June 1 Moodyrsquos Investors Service which rates bonds issued by governments and
commercial entities downgraded Indiarsquos foreign-currency and local-currency long-term
issuer ratings by a notch to lsquoBaa3rsquo from lsquoBaa2rsquo adding that the outlook remained
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682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 29
issuer ratings by a notch to Baa3 from Baa2 adding that the outlook remained
lsquonegativersquo This is the lowest investment-grade rating in Moodyrsquos assessment Bond credit
ratings represent the creditworthiness of corporate or government paper
The reasons Moodyrsquos cited for the downgrade are weak implementation of economic
reforms since 2017 relatively low economic growth over a sustained period a significant
deterioration in the fiscal position of governments (central and state) and the rising stress
in the countryrsquos financial sector
Moodyrsquos downgrade of Indiarsquos sovereign rating to Baa3 brings its rating in line with
Standard ampPoorrsquos (SampP) and Fitchrsquos ratings (BBB-) a notch above lsquojunkrsquo status This comes
after Moodyrsquos outlook downgrade to lsquonegativersquo in November 2019 which it has still
maintained while SampP and Fitch currently have a lsquostablersquo outlook for India
ldquoWe think the Moodyrsquos downgrade was impending and is largely priced in by the marketsrdquo
says Madhavi Arora lead economist with Edelweiss Securities ldquoAny knee-jerk reaction in
forex and rates markets would thus likely be short-livedrdquo Indeed the stock markets
ignored the ratings action as a downgrade was already expected In fact on June 2 the
benchmark Sensex rose 522 points to touch 33826 on the Bombay Stock Exchange on the
back of positive sentiment across global markets as economies opened up after a
prolonged lockdown
ADVERTISEMENT
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 39
The bigger risk according to Arora is a potential downgrade from SampP and Fitch ldquoTheir
downgrade to lsquojunkrsquo could be a bigger risk [for markets] but this would first involve their
outlook moving to lsquonegativersquo from the current lsquostablersquo which generally comes with a big
lagrdquo says Arora Madan Sabnavis chief economist of Care Ratings says that the timing of
the downgrade ldquois a bit oddrdquo because of the extraordinary situation prevailing in many
countries However the government needs to look into the concerns raised by the rating
agency ldquoThe Indian government is not affected because it does not borrow from the
overseas market It is a reputation issue But for Indian companies that borrow in the
external commercial borrowings market the cost of funding will go uprdquo Sabnavis says
The downgrade came close on the heels of the GDP numbers for the fourth quarter of
fiscal 2020 Growth slowed to 31 per cent in Q4 a low not seen in more than 17 years
with private investment and manufacturing hit hard The slowdown was significant
considering the fact that the impact of the Covid-induced lockdown was felt for only a few
days in March This indicates that factors other than the lockdown were responsible for
pulling down growth These factors have not gone away and will continue to weigh on
growth prospects over and above the disruption caused by the lockdown
The downgrade by Moodyrsquos points to some of these deep-rooted issues Already growth
had been tottering in the past few quarters In the third quarter of fiscal 2020 Indiarsquos GDP
grew at 45 per cent compared to 48 per cent in the second quarter But in the fourth
things went from bad to worse lsquoThe overall pace of growth weakened across key sectors
in Q4 of fiscal 2020rsquo says Care Ratings in a report The government sector was seen to be
propelling overall economic output and demand during the quarter and had acted as a
buffer against the low growth in other sectors like manufacturing and construction which
went into the negative zone One of the key issues that India has seen in recent quarters
is a slackness in demand Most of the measures the government has resorted to in recent
times (including what was announced in the Union budget) have been on the supply side
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 49
Posted by
Dev Goswami
There is no appetite to either invest or to spend Private consumption which is said to be
the driver of the economy (accounting for 60 per cent of GDP) declined to 27 per cent in
the fourth quarter of fiscal 2020 from 62 per cent in the same quarter a year ago
Investments witnessed a sharp contraction of 65 per cent in the fourth quarter lsquoThis
portends worsening economic conditions for the domestic economy in coming months in
the event of failure to contain the spread of the virus in the countryrsquo the Care Ratings
note adds However government spending helped and so did agriculture growth
One problem with sustained high government spending is that the governmentrsquos fiscal
calculations go awry For fiscal 2020 the countryrsquos fiscal deficit has widened to 46 per
cent of the GDP overshooting the governmentrsquos revised target of 38 per cent Also the
fiscal deficit in April was already 35 per cent of the target for fiscal 2021 of Rs 796 lakh
crore due to lower government revenue Revenues were hit hard after the economy went
into a coma due to the lockdown The governmentrsquos net tax revenue came in at Rs 21412
crore in April a 70 per cent decline compared to April last year
ADVERTISEMENT
Issues like these foretell a rough ride for the economy in the days ahead
IndiaTodayin has plenty of useful resources that can help you better understand thecoronavirus pandemic and protect yourself Read our comprehensive guide (with informationon how the virus spreads precautions and symptoms) watch an expert debunk myths andaccess our dedicated coronavirus page
POST A COMMENT
Get real-time alerts and all the news on your phone with the all-new India Today app Download from
Akshar Group | Sponsored
Safest Investment Asset by Akshar Group ₹899 Lac in Vashi
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 29
issuer ratings by a notch to Baa3 from Baa2 adding that the outlook remained
lsquonegativersquo This is the lowest investment-grade rating in Moodyrsquos assessment Bond credit
ratings represent the creditworthiness of corporate or government paper
The reasons Moodyrsquos cited for the downgrade are weak implementation of economic
reforms since 2017 relatively low economic growth over a sustained period a significant
deterioration in the fiscal position of governments (central and state) and the rising stress
in the countryrsquos financial sector
Moodyrsquos downgrade of Indiarsquos sovereign rating to Baa3 brings its rating in line with
Standard ampPoorrsquos (SampP) and Fitchrsquos ratings (BBB-) a notch above lsquojunkrsquo status This comes
after Moodyrsquos outlook downgrade to lsquonegativersquo in November 2019 which it has still
maintained while SampP and Fitch currently have a lsquostablersquo outlook for India
ldquoWe think the Moodyrsquos downgrade was impending and is largely priced in by the marketsrdquo
says Madhavi Arora lead economist with Edelweiss Securities ldquoAny knee-jerk reaction in
forex and rates markets would thus likely be short-livedrdquo Indeed the stock markets
ignored the ratings action as a downgrade was already expected In fact on June 2 the
benchmark Sensex rose 522 points to touch 33826 on the Bombay Stock Exchange on the
back of positive sentiment across global markets as economies opened up after a
prolonged lockdown
ADVERTISEMENT
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 39
The bigger risk according to Arora is a potential downgrade from SampP and Fitch ldquoTheir
downgrade to lsquojunkrsquo could be a bigger risk [for markets] but this would first involve their
outlook moving to lsquonegativersquo from the current lsquostablersquo which generally comes with a big
lagrdquo says Arora Madan Sabnavis chief economist of Care Ratings says that the timing of
the downgrade ldquois a bit oddrdquo because of the extraordinary situation prevailing in many
countries However the government needs to look into the concerns raised by the rating
agency ldquoThe Indian government is not affected because it does not borrow from the
overseas market It is a reputation issue But for Indian companies that borrow in the
external commercial borrowings market the cost of funding will go uprdquo Sabnavis says
The downgrade came close on the heels of the GDP numbers for the fourth quarter of
fiscal 2020 Growth slowed to 31 per cent in Q4 a low not seen in more than 17 years
with private investment and manufacturing hit hard The slowdown was significant
considering the fact that the impact of the Covid-induced lockdown was felt for only a few
days in March This indicates that factors other than the lockdown were responsible for
pulling down growth These factors have not gone away and will continue to weigh on
growth prospects over and above the disruption caused by the lockdown
The downgrade by Moodyrsquos points to some of these deep-rooted issues Already growth
had been tottering in the past few quarters In the third quarter of fiscal 2020 Indiarsquos GDP
grew at 45 per cent compared to 48 per cent in the second quarter But in the fourth
things went from bad to worse lsquoThe overall pace of growth weakened across key sectors
in Q4 of fiscal 2020rsquo says Care Ratings in a report The government sector was seen to be
propelling overall economic output and demand during the quarter and had acted as a
buffer against the low growth in other sectors like manufacturing and construction which
went into the negative zone One of the key issues that India has seen in recent quarters
is a slackness in demand Most of the measures the government has resorted to in recent
times (including what was announced in the Union budget) have been on the supply side
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 49
Posted by
Dev Goswami
There is no appetite to either invest or to spend Private consumption which is said to be
the driver of the economy (accounting for 60 per cent of GDP) declined to 27 per cent in
the fourth quarter of fiscal 2020 from 62 per cent in the same quarter a year ago
Investments witnessed a sharp contraction of 65 per cent in the fourth quarter lsquoThis
portends worsening economic conditions for the domestic economy in coming months in
the event of failure to contain the spread of the virus in the countryrsquo the Care Ratings
note adds However government spending helped and so did agriculture growth
One problem with sustained high government spending is that the governmentrsquos fiscal
calculations go awry For fiscal 2020 the countryrsquos fiscal deficit has widened to 46 per
cent of the GDP overshooting the governmentrsquos revised target of 38 per cent Also the
fiscal deficit in April was already 35 per cent of the target for fiscal 2021 of Rs 796 lakh
crore due to lower government revenue Revenues were hit hard after the economy went
into a coma due to the lockdown The governmentrsquos net tax revenue came in at Rs 21412
crore in April a 70 per cent decline compared to April last year
ADVERTISEMENT
Issues like these foretell a rough ride for the economy in the days ahead
IndiaTodayin has plenty of useful resources that can help you better understand thecoronavirus pandemic and protect yourself Read our comprehensive guide (with informationon how the virus spreads precautions and symptoms) watch an expert debunk myths andaccess our dedicated coronavirus page
POST A COMMENT
Get real-time alerts and all the news on your phone with the all-new India Today app Download from
Akshar Group | Sponsored
Safest Investment Asset by Akshar Group ₹899 Lac in Vashi
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 39
The bigger risk according to Arora is a potential downgrade from SampP and Fitch ldquoTheir
downgrade to lsquojunkrsquo could be a bigger risk [for markets] but this would first involve their
outlook moving to lsquonegativersquo from the current lsquostablersquo which generally comes with a big
lagrdquo says Arora Madan Sabnavis chief economist of Care Ratings says that the timing of
the downgrade ldquois a bit oddrdquo because of the extraordinary situation prevailing in many
countries However the government needs to look into the concerns raised by the rating
agency ldquoThe Indian government is not affected because it does not borrow from the
overseas market It is a reputation issue But for Indian companies that borrow in the
external commercial borrowings market the cost of funding will go uprdquo Sabnavis says
The downgrade came close on the heels of the GDP numbers for the fourth quarter of
fiscal 2020 Growth slowed to 31 per cent in Q4 a low not seen in more than 17 years
with private investment and manufacturing hit hard The slowdown was significant
considering the fact that the impact of the Covid-induced lockdown was felt for only a few
days in March This indicates that factors other than the lockdown were responsible for
pulling down growth These factors have not gone away and will continue to weigh on
growth prospects over and above the disruption caused by the lockdown
The downgrade by Moodyrsquos points to some of these deep-rooted issues Already growth
had been tottering in the past few quarters In the third quarter of fiscal 2020 Indiarsquos GDP
grew at 45 per cent compared to 48 per cent in the second quarter But in the fourth
things went from bad to worse lsquoThe overall pace of growth weakened across key sectors
in Q4 of fiscal 2020rsquo says Care Ratings in a report The government sector was seen to be
propelling overall economic output and demand during the quarter and had acted as a
buffer against the low growth in other sectors like manufacturing and construction which
went into the negative zone One of the key issues that India has seen in recent quarters
is a slackness in demand Most of the measures the government has resorted to in recent
times (including what was announced in the Union budget) have been on the supply side
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 49
Posted by
Dev Goswami
There is no appetite to either invest or to spend Private consumption which is said to be
the driver of the economy (accounting for 60 per cent of GDP) declined to 27 per cent in
the fourth quarter of fiscal 2020 from 62 per cent in the same quarter a year ago
Investments witnessed a sharp contraction of 65 per cent in the fourth quarter lsquoThis
portends worsening economic conditions for the domestic economy in coming months in
the event of failure to contain the spread of the virus in the countryrsquo the Care Ratings
note adds However government spending helped and so did agriculture growth
One problem with sustained high government spending is that the governmentrsquos fiscal
calculations go awry For fiscal 2020 the countryrsquos fiscal deficit has widened to 46 per
cent of the GDP overshooting the governmentrsquos revised target of 38 per cent Also the
fiscal deficit in April was already 35 per cent of the target for fiscal 2021 of Rs 796 lakh
crore due to lower government revenue Revenues were hit hard after the economy went
into a coma due to the lockdown The governmentrsquos net tax revenue came in at Rs 21412
crore in April a 70 per cent decline compared to April last year
ADVERTISEMENT
Issues like these foretell a rough ride for the economy in the days ahead
IndiaTodayin has plenty of useful resources that can help you better understand thecoronavirus pandemic and protect yourself Read our comprehensive guide (with informationon how the virus spreads precautions and symptoms) watch an expert debunk myths andaccess our dedicated coronavirus page
POST A COMMENT
Get real-time alerts and all the news on your phone with the all-new India Today app Download from
Akshar Group | Sponsored
Safest Investment Asset by Akshar Group ₹899 Lac in Vashi
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall
682020 The loss of faith - UP Front News - Issue Date Jun 15 2020
httpswwwindiatodayinmagazineup-frontstory20200615-the-loss-of-faith-1685810-2020-06-06 49
Posted by
Dev Goswami
There is no appetite to either invest or to spend Private consumption which is said to be
the driver of the economy (accounting for 60 per cent of GDP) declined to 27 per cent in
the fourth quarter of fiscal 2020 from 62 per cent in the same quarter a year ago
Investments witnessed a sharp contraction of 65 per cent in the fourth quarter lsquoThis
portends worsening economic conditions for the domestic economy in coming months in
the event of failure to contain the spread of the virus in the countryrsquo the Care Ratings
note adds However government spending helped and so did agriculture growth
One problem with sustained high government spending is that the governmentrsquos fiscal
calculations go awry For fiscal 2020 the countryrsquos fiscal deficit has widened to 46 per
cent of the GDP overshooting the governmentrsquos revised target of 38 per cent Also the
fiscal deficit in April was already 35 per cent of the target for fiscal 2021 of Rs 796 lakh
crore due to lower government revenue Revenues were hit hard after the economy went
into a coma due to the lockdown The governmentrsquos net tax revenue came in at Rs 21412
crore in April a 70 per cent decline compared to April last year
ADVERTISEMENT
Issues like these foretell a rough ride for the economy in the days ahead
IndiaTodayin has plenty of useful resources that can help you better understand thecoronavirus pandemic and protect yourself Read our comprehensive guide (with informationon how the virus spreads precautions and symptoms) watch an expert debunk myths andaccess our dedicated coronavirus page
POST A COMMENT
Get real-time alerts and all the news on your phone with the all-new India Today app Download from
Akshar Group | Sponsored
Safest Investment Asset by Akshar Group ₹899 Lac in Vashi
ReadArticle
Survival at stake for 70cash-strapped start-upsin India Survey
Sensex Nifty end higheron Bharti Airtel boostbanks fall