S&P Global Ratings, a renowned US-based credit rating agency, has reaffirmed India’s sovereign rating at ‘BBB-‘ with a stable outlook. The agency stated that India’s robust economic fundamentals will serve as a foundation for growth in the next 2-3 years.
In a statement, S&P Global Ratings confirmed its long-term unsolicited foreign and local currency sovereign credit ratings for India at ‘BBB-‘ and its short-term rating at ‘A-3’. The stable outlook on the long-term rating signifies S&P’s belief that India’s strong economy and steady revenue growth will support its weak fiscal settings.
India’s sovereign rating is an assessment of the country’s creditworthiness and reflects the level of risk associated with its ability to meet financial obligations. The ‘BBB-‘ rating indicates that India is classified as having a moderate risk of defaulting on its debt payments.
S&P Global Ratings cited India’s sound economic fundamentals as a key factor in affirming the rating. The country has been experiencing consistent economic growth, driven by factors such as a large consumer market, robust domestic demand, and a young workforce. Despite challenges, such as the impact of the COVID-19 pandemic, India has demonstrated resilience and is expected to rebound strongly.
The agency’s affirmation of India’s rating also acknowledges the government’s efforts to implement structural reforms aimed at boosting the economy. Initiatives such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC) have sought to streamline the business environment and improve transparency.
While India’s fiscal settings are considered weak, S&P Global Ratings believes that the country’s strong economic performance will compensate for this vulnerability. The agency expects India’s fiscal deficit to gradually improve over time due to revenue growth and continued government reforms.
India’s stable outlook reflects the agency’s confidence in the country’s economic resilience and its ability to weather challenges. S&P Global Ratings anticipates that India’s economic growth will remain robust, supported by factors such as strong private consumption, infrastructure investments, and ongoing structural reforms.
However, the agency also highlighted several risks that could impact India’s rating. These risks include fiscal pressures from the COVID-19 pandemic, potential setbacks in implementing reforms, and the need to address issues in the financial sector, particularly concerning non-performing assets (NPAs).
S&P Global Ratings’ affirmation of India’s rating comes as a positive development for the country, as it indicates external validation of its economic performance and policies. A stable rating and outlook provide confidence to investors and lenders, potentially attracting more foreign direct investment (FDI) and reducing borrowing costs.
The rating affirmation could also support India’s efforts to access global capital
