Moody's downgrades India's sovereign rating

Consequently, Moody's downgraded India's foreign-currency and local-currency long-term issuer ratings to Baa3 from Baa2.

It also downgraded India's local-currency senior unsecured rating to Baa3 from Baa2, and its short-term local-currency rating to P-3 from P-2.

Besides, it kept the outlook as negative. Currently, the sovereign rating assigned to India is Baa2 with a negative outlook.

"The decision to downgrade India's ratings reflects Moody's view that the country's policymaking institutions will be challenged in enacting and implementing policies which effectively mitigate the risks of a sustained period of  relatively low growth, significant further deterioration in the general government fiscal position and stress in the financial sector," Moody's said.

"The negative outlook reflects dominant, mutually-reinforcing, downside risks from deeper stresses in the economy and financial system that could lead to a more severe and prolonged erosion in fiscal strength than Moody's currently projects," it added.