S&P maintains India ratings at 'BBB-', says outlook stable

Andrew Cummings
November 24, 2017

"Stable outlook reflects our view that over the next 2 years growth will remain strong, India will maintain its sound external accounts position and fiscal deficits will remain broadly in line with our expectations", said S&P Global Ratings.

S&P, in January 2007, rated India at BBB, the lowest investment grade rating for bonds, and gave an outlook of "stable".

Last week, US-based rating agency Moody's Investors Service, upgraded India's sovereign bond ratings for the first time in over 14 years citing the government's "wide-ranging program of economic and institutional reforms".

After Moody's rating upgrade for the Indian economy, everyone is looking forward to the next possible piece of cake: a rating upgrade from Standard & Poor's (S&P) that is expected to come up soon.


In October, S&P had said that India needs to improve its fiscal position for a rating upgrade.

Ending all the ongoing economic discussion, Standard & Poor's has released its latest ratings and the Indian rating has remained unchanged.

"Upward pressure on the ratings could build if the government's reforms markedly improve its net general government fiscal out-turns and so reduce the level of net general government debt", S&P said on Friday.

The report noted that despite two quarters of weaker-than expected growth, India's economy will grow robustly in 2018-20, and foreign exchange reserves will continue to rise. It affirmed A-3 short-term sovereign credit rating on India. S&P also maintained a favourable outlook on private consumption.


Since then the government has announced a recapitalisation plan for public sector banks and has revamped GST rates.

Besides upgrading India's sovereign ratings to Baa2 from its lowest investment grade Baa3, the ratings upgrade was accompanied by a change in the outlook for India's rating to "stable" from "positive".

"India's general government revenue, at an estimated 22 percent of 2017 GDP, is low compared with peer sovereigns".


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