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Two rating agencies with two different views on India


Two rating agencies with two different views on India
Two reputed global rating agencies have two different view on India's economic fundamentals. S&P has a pessimistic view and on Tuesday re-iterated a one in three chance of a downgrade, while Moody's had a more optimistic picture to paint, maintaining a stable outlook.

"A rating downgrade is likely if India's economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow," S&P said on Tuesday.


India has a BBB- rating from S&P, one of the worst rating from amongst the BRIC nations and one notch above junk.

A Reuters reports stated that the rating agency, which in April cut India's outlook rating to negative from stable, said it did not expect the government to reach its fiscal deficit target of 4.5 percent of gross domestic product in the fiscal year that ends in March 2014.

"Given the political cycle - with the next elections to be held by March 2014 - and the current political gridlock, we expect only modest progress in fiscal and public sector reforms," it said.

Moody's on the other hand has always looked at India's strengths and on Tuesday said that the outlook on its Baa3 rating for India is stable, citing the country's large, diverse economy and strong gross domestic product growth as supportive of the rating.

"...(growth prospects have improved) with a new finance minister, the withdrawal of an obstinate coalition partner and a flurry of pro-business reforms designed to lift the economy from its funk...These moves are working," Moody's said in a newsreport in the Economic Times.

"India should...enjoy a better 2013, though for different reasons," Moody's said adding that "policy missteps and political paralysis" crushed business confidence and investment in 2012.


Clearly, two reputed global agencies have two different views on India. In fact, both the views are perfectly right. One can understand the S&P concerns on the high deficits, fragile political situation, while one must appreciate Moody's for looking at India's strengths.

It's just a case whether "the glass is half empty or half full" and nothing wrong with two different perspectives.

Read more about: s ampp moodys s amp;p
Story first published: Wednesday, December 12, 2012, 8:59 [IST]
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