S&P retains India's rating at 'BBB-' with stable outlook
India urgently needs more ambitious structural and financial sector reform measures and a medium-term fiscal consolidation strategy due to the rising debt levels , the International Monetary Fund (IMF) said
Global agency Standard and Poor's on Thursday retained India's sovereign ratings at 'BBB-' with stable outlook, saying the country's GDP is likely to gradually recover towards longer-term trend rates over the next two to three years.
'BBB' rating refers to adequate capacity to the rated entity to meet its financial commitments.
The rating agency, however, pointed out that India's fiscal position remains precarious, with elevated fiscal deficits and net government indebtedness.
Fiscal deficits have exceeded the government's plan, S&P said, adding it expect limited consolidation over the next few years.
"S&P Global Ratings affirmed its 'BBB-' long-term and 'A-3' short-term unsolicited foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating is stable," it said in a statement.
India's economic growth is estimated to slow down to 5 per cent during 2019-20 and the government expects the GDP to rebound to over 6 per cent in the next financial year.
The ratings on India reflect the country's above-average real GDP growth, sound external profile, and evolving monetary settings, it said adding that India's strong democratic institutions promote policy stability and compromise, and also underpin the ratings.
These strengths are balanced against vulnerabilities stemming from the country's low per capita income and consistently elevated fiscal deficits that contribute to high general government debt, net of liquid assets, the statement said.
Meanwhie, India urgently needs more ambitious structural and financial sector reform measures and a medium-term fiscal consolidation strategy due to the rising debt levels , the International Monetary Fund (IMF) said.
Responding to a question on the recent budget presented by Union Finance Minister Nirmala Sitharaman, IMF Spokesperson Gerry Rice said that there is a weaker economic environment in India.
"While the budget touches on ongoing sectoral efforts, there remains an urgent need for more ambitious structural and financial sector reform measures and a medium-term fiscal consolidation strategy, anchored in tangible revenue and expenditure measures, especially given rising debt levels,” Rice told reporters.
"The environment is weaker than we had forecast earlier, that a more accumulative fiscal stance, this year, is appropriate, so that more accumulative fiscal stance in the budget, we think, is appropriate,” he said.
“But, over the medium term, to be looking at a fiscal consolidation strategy,” Rice said.
The IMF in January lowered India's economic growth estimate for the current fiscal to 4.8 per cent.