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S&P reaffirms India’s rating at ‘BBB’ with stable outlook

In September 2014, S&P had assigned India the lowest investment grade rating with stable outlook. Prior to that, it had assigned the same rating to India with a negative outlook.

In what could give India’s policymakers some respite amidst a spate of gloomy macro economic data, global credit rating agency Standard & Poor’s has reaffirmed India’s sovereign rating at ‘BBB-‘ with stable outlook, economic affairs secretary Atanu Chakraborty said on Tuesday.

“They (S&P) have stated that India’s economy continues to achieve impressive long-term growth rates despite a recent deceleration. S&P expects the Indian economy to continue to outperform its peers and that the growth will remain strong over the next 2 years,” tweeted Chakraborty.

In September 2014, S&P had assigned India the lowest investment grade rating with stable outlook. Prior to that, it had assigned the same rating to India with a negative outlook.

On November 8, Moody’s Investors Service had cut India’s sovereign credit rating outlook to ‘negative’ from ‘stable’. It cited ‘increasing risks, that the country’s economic growth, will remain materially lower than in the past’ and the resultant gradual rise in an already-high debt burden. It affirmed the Baa2 foreign-currency and local-currency long-term issuer ratings for India, the second lowest investment grade score.

The rating agency said its decision to revise the outlook was partly attributable to ‘lower government and policy effectiveness at addressing long-standing economic and institutional weaknesses’, causing the government here to confute this view and assert that ‘India continues to offer strong prospects of growth in the near and medium-term’.
Moody’s had in November 2017 raised its rating for the government of India a notch from Baa3 (lowest investment grade) to Baa2 after a long gap of 14 years. Independent agencies such as Nomura slashed its 2019 GDP growth projection for India to 4.9% from 5.7% forecast earlier; it also cut the forecast for 2020 steeply from 6.9% to 6%.

The lowering of outlook will put extra pressure on the Narendra Modi government, which is facing flak for the severe economic slowdown.

Finance minister Nirmala Sitharaman has announced a series of steps over the last few weeks to reverse the slowdown, most aimed at catalysing investments and many effectively undoing some of the announcements in her maiden Budget.

Source: Financial Express