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S&P Global reaffirms India's ratings at BBB- with stable outlook; expects strong growth over 2 years

The rating action comes days after India's GDP growth hit a six-and-half-year low of 4.5 per cent in the second quarter of the current fiscal

twitter-logo BusinessToday.In   New Delhi     Last Updated: December 4, 2019  | 00:04 IST
S&P Global reaffirms India's ratings at BBB- with stable outlook; expects strong growth over 2 years

Rating agency Standard and Poor's have reaffirmed India's sovereign credit rating at BBB- with a stable outlook, the government said on Tuesday. The American rating agency has maintained a stable outlook on grounds of their expectations that growth in India will remain strong over the next two years, the Ministry of Finance claimed in a statement.

"India's economy continues to achieve impressive long term growth rates despite a recent deceleration. It is believed that the economic slowdown is cyclical rather than structural," Finance Ministry quoted S&P Global Ratings in its statement. "They expect the economy to continue to outperform its peers on the back of rising domestic demand and strong demographics."

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A 'BBB' rating signifies that an entity has adequate capacity to meet its financial commitments. However, adverse economic conditions or changing circumstances are more likely to weaken its capacity to meet financial commitments.

"They have maintained a stable outlook on the basis of their expectation that over the next two years the growth will remain strong and India will maintain its sound net external position and fiscal deficit will remain elevated but broadly in line with their forecast," the ministry further added.

The rating action comes days after India's GDP growth hit a six-and-half-year low of 4.5 per cent in the second quarter of the current fiscal due to weak consumer demand and global slowdown.

In November, Moody's Investors Service has cut India's credit rating outlook to negative - the first step towards a downgrade, saying the government has been partly ineffective in addressing economic weakness, leading to rising risks that growth will remain lower. Another international rating agency, Fitch Ratings continues to hold the country's outlook at stable.

The government has been taking a slew of measures, including sharp reduction corporate tax to boost the economy. Besides, the Reserve Bank of India has been extending support to the government's effort by repeatedly cutting key policy rate. The central bank's monetary policy committee is expected to cut policy rates for the sixth time in a row by another 25 basis points in its ongoing bi-monthly meeting.

ALSO READ:RBI Governor Shaktikanta Das-led MPC starts 3-day deliberations on policy review

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