Mumbai: SStandard & Poor’s on Friday maintained India’s sovereign rating at ‘BBB-‘, just one grade above junk status. S&P has rated India as stable.
There were speculations of a push by S&P, especially after Moody's upgraded India's ranking by one spot.
While S&P retained the rating, it appreciated the Narendra Modi government's fiscal consolidation drive and said that the reforms undertaken are beneficial for the economy.
Sizable fiscal deficit, low per capita income and high government debt detract from sovereign credit profile, S&P said, adding that fiscal gap is in line with expectations.
After Moody’s rating upgrade for the Indian economy, experts and stakeholders were looking forward to the next boost.
An upgrade for India’s ratings could have been highly positive for the bond market and would have also helped reduce interest costs for both the government as well as companies raising funds from abroad.
A sovereign rating indicates a country’s risk profile and a rating upgrade enhances the country’s position as an investment destination for foreign investors.
Back in October, S&P had stated that India needs to improve on its fiscal position if it hopes for a rating upgrade.
The Moody’s ratings, on November 17, had come after 14 years. India’s sovereign rating was last upgraded by Moody’s in January 2004, to Baa3 from Ba1.
In January 2007, S&P had changed India’s rating to BBB-, which is the lowest investment grade rating for bonds. The outlook that it assigned back then was “stable” which it later changed to negative in 2009 and again raised it to stable in 2010.
In 2012, the outlook was lowered to negative, which again changed soon after the Modi government assumed office in May 2014. However, the rating remained unchanged at BBB-.
The ranking also comes within weeks of India's 30-place improvement in World Bank’s Ease of Doing Business rankings, in which India jumped to the 100th rank this time.
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