India continues to “lag way behind” in COVID vaccination: Fitch

In April 2021, Fitch affirmed India's sovereign rating at 'BBB-' with a negative outlook, which was changed from 'stable' in June last year.

Fitch Ratings on Tuesday said India continues to “lag way behind” in COVID vaccination, and the negative outlook on sovereign rating signifies the rising debt-to-GDP ratio.

In April 2021, Fitch affirmed India’s sovereign rating at ‘BBB-‘ with a negative outlook. The outlook was changed to ‘negative’ from ‘stable’ in June last year on grounds that the pandemic had significantly weakened the country’s growth outlook and exposed the challenges associated with a high public-debt burden.

Addressing the Global Sovereign Conference 2021, Asia-Pacific, Fitch Ratings Senior Director, Head of Asia-Pacific Sovereign Ratings, Stephen Schwartz said vaccination is the key to economic recovery across the world.

“The (APAC) region which was so successful in containing the virus early on, got behind the curve when it came to rollout of vaccines. Singapore really stands out now with 80 per cent of its population being vaccinated. But many countries in the region like Vietnam, Thailand and India continue to lag way behind and as a result continue to have periodic restrictions,” Schwartz said.

Over 70 crore vaccine doses have been administered so far in India. The country has administered more than 1 crore doses daily in 3 out of the last 11 days.

Schwartz further said the negative outlook in India’s ratings is on account of rise in debt-to-GDP ratio and uncertainty about the “trajectories”.

The debt-to-GDP ratio stood at 72 per cent in 2019 and the agency expects it to rise above 90 per cent of GDP over the next five years.

In its presentation, Fitch said there could be a negative trigger for sovereign rating in case of failure to reduce the fiscal deficit to a level consistent with putting government debt-to-GDP ratio on a downward trajectory.

The fiscal deficit for current fiscal year which began April 1 has been pegged at 6.8 per cent. As per the glide path for fiscal consolidation announced in the Budget, the government plans to bring down the fiscal deficit to 4.5 per cent of gross domestic product (GDP) by 2025-26.

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