The chairman of Moody's Investors Service has warned that economic recovery in India will remain a "major challenge" unless the number of COVID-19 cases starts declining.
"The only tool we have right now [to fight coronavirus] is social distancing and that's exceptionally hard to do in India," Henry McKinnell told The Financial Times adding that a vaccine for the deadly virus is still a long way off.
"Hopefully we'll have a vaccine, but I think the vaccine is going to take longer than people understand," McKinnell added.
India currently sits at the fourth position in terms of confirmed COVID-19 cases only behind the US, Brazil and Russia. As on July 5, the country has reported 6,73,165 cases, which includes 19,268 deaths. Maharashtra, Tamil Nadu, Delhi and Gujarat have reported the highest number of COVID-19 cases.
After over two months of complete lockdown, the country reopened rather swiftly despite the number of reported cases on the rise as people grew wary of the lockdown.
"The virus will dictate the pace of that recovery," said McKinnell. "If I’m correct and economic activity is a function of control of the virus, India has a major challenge."
The financial services company had earlier downgraded India's credit rating to BAA3 and maintained a negative outlook.
"Moody's has 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. The outlook remains negative," it had said in a statement.
"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."S&P
and Fitch also rated India one notch above junk last month, with the latter lowering its outlook to negative