S&P keeps India's rating unchanged at 'BBB-'; keeps outlook stable

S&P Global Ratings on Wednesday kept India's sovereign rating unchanged at 'BBB-' with a stable outlook on the country's long-term rating.

The American credit rating agency said that the stable outlook "reflects it expectation that India's economy will recover" after containing the COVID-19 pandemic and the country will "maintain its sound net external position."

It also presupposes that the government's fiscal deficit will subside significantly after it touched a multi-year high in fiscal year 2021, S&P said.

Also Read: Coronavirus impact: Indian GDP to contract 5% in FY21, stimulus not enough: S&P Ratings

The American credit rating agency added that despite the rising risks to growth, the economic and fiscal position will stabilise and turn the corner from 2021 onwards.

The agency further stated that India's ratings reflect its above-average real GDP growth, evolving monetary settings, and strong external profile.

"While risks to India's long-term growth rate are rising, ongoing economic reforms, if executed well, should keep the country's growth rate ahead of peers," S&P said in a statement.

The agency has forecast India's economy to shrink by 5 per cent this fiscal year.

Earlier this month, Moody's Investors Service lowered India's foreign-currency and local-currency long term issuer ratings from Baa3 to Baa2, keeping the economic outlook negative.

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