The declining rupee will have a 'limited' impact on India's sovereign rating.

The  Indian rupee has been falling, recording new lows. This has had an adverse impact on corporate profitability as well as government finances. However, as per ratings agency Moody's Investor Service, the declining rupee will have a 'limited' impact on India's sovereign rating. The reason for this is that only 7% of total government debt is from overseas. As a percentage of GDP (Gross Domestic Product), this comes to about 5%. Comparatively, the private sector is set to be more hurt. The rupee depreciation has significantly increased the cost of repaying their foreign currency borrowings. Indian corporates have about US$ 96.6 bn in external debt.However, only 40-60% of this is estimated to have been hedged. Even then, the exposure of the private sector to external debt is "relatively low" at 16% of GDP. This means that the impact on the sovereign ratings due to this would not be too substantial. Fortunately, India's exposure to external debt is not too high. If that had been the case, India would have witnessed its own debt crisis akin to the troubled Eurozone economies.