Global agency Standard and Poor’s on Thursday retained India’s sovereign ratings at ‘BBB-‘ with stable outlook, saying the country’s GDP is likely to gradually recover towards longer-term trend rates over the next two to three years.
‘BBB’ rating refers to adequate capacity to the rated entity to meet its financial commitments. The rating agency, however, pointed out that India’s fiscal position remains precarious, with elevated fiscal deficits and net government indebtedness.
Fiscal deficits have exceeded the government’s plan, S&P said, adding it expects limited consolidation over the next few years.
“S&P Global Ratings affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating is stable,” it said in a statement.
India’s economic growth is estimated to slow down to 5 per cent during 2019-20 and the government expects the GDP to rebound to over 6 per cent in the next financial year.
The ratings on India reflect the country’s above-average real GDP growth, sound external profile, and evolving monetary settings, it said adding that India’s strong democratic institutions promote policy stability and compromise, and also underpin the ratings.
These strengths are balanced against vulnerabilities stemming from the country’s low per capita income and consistently elevated fiscal deficits that contribute to high general government debt, net of liquid assets, the statement said.