S&P retains India’s rating at BBB- for now

NEW DELHI: Global credit rating agency Standard and Poor’s (S&P) on Monday maintained India’s sovereign rating at ‘BBB –’, stating that an upgrade would depend on the pace of reforms and improvement in public finances.

“Upward pressure on the ratings could build if the government’s reforms markedly improve its general government fiscal outturns and with them the level of net general government debt so that it falls below 60% of GDP,” S&P said.

The agency retained India’s rating at ‘BBB-’ with stable outlook and expressed hope that country’s economic growth would average about 8% during 2015-18 period.

BBB- rating is the lowest “investment” grade and just a notch above “junk” status.

“The outlook indicates that we do not expect to change our rating on India this year or next based on our current set of forecasts,” S&P said.

There was also a risk of a ratings downgrade if “contrary to our expectations, the new monetary council is not effective in achieving its targets, or if the external liquidity position of the nation deteriorates more than we currently expect”.

It said India’s parties have made progress in building consensus on a passage of laws to address long-standing impediments to growth, such as strengthening the business climate (through simplifying regulations and improving contract enforcement and trade), improving labour market flexibility and reforming the energy sector.

“We also observe some progress in tax reforms through the likely introduction of a goods and services tax to replace complex indirect taxes,” it said.