India Must Deliver on Reforms; Check Fiscal Deficit: Standard & Poor

Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    Days ahead of the Budget, rating agency S&P today said India must deliver on reform promises and boost growth as a weak fiscal position is constraining its sovereign rating, which is as such just a notch above the junk level.

    "India's low income levels and weak fiscal and debt indicators constrain the country's credit profile," Standard and Poor's said in a research note on the country's rating.

    India Must Deliver on Reforms; Check Fiscal Deficit: Standard & Poor
    The agency said last year's election results created a conducive environment for reforms with political stability, but termed the "governance effectiveness" as a "neutral credit factor".
     

    It had upgraded India's credit rating outlook from 'negative' to 'stable' in September on hopes of reforms. Prior to that, it had voiced concerns about lack of growth, a sense of "policy paralysis" and the high fiscal deficit, and had even threatened to downgrade the rating to 'junk'.

    S&P today listed key steps that are required for an upgrade from the current sovereign debt credit rating of 'BBB-minus' -- the lowest investment grade rating.

    "Crucial factors include higher growth in real per capita GDP, stronger fiscal and debt metrics, and a stronger external position or improved monetary policy setting, and the government's ability to fulfil its promises on key reforms will be critical to the country's success," it added.

    S&P said higher growth in real per capita GDP, stronger fiscal/debt metrics and an improved external position as well as monetary policy setting are essential to enhance the current 'BBB-' rating with a stable outlook.

    "The government's ability to fulfil its promises on key reforms will therefore be critical," S&P credit analyst Agost Benard said.

    Finance Minister Arun Jaitely will present the Union Budget, 2015-16 on February 28 and there are expectations that he may announce some pro-growth measures as also certain steps to benefit the common man.

    PTI

    Story first published: Tuesday, February 24, 2015, 8:56 [IST]
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more