Chennai: For the 13th year in a row, global rating agency S&P has retained India’s sovereign rating at the lowest investment grade of ‘BBB.
It however said the economy and fiscal position will stabilise and begin to recover from 2021 onwards.
Stating that the outlook is stable, the agency said though risks to long-term growth are rising, India’s ratings reflect the country’s above-average real GDP growth, sound external profile and evolving monetary settings.
It has forecast India’s economy to shrink by 5 per cent in the current fiscal. It, however, has projected GDP growth to be 8.5 per cent in 2021-22 and 6.5 per cent in 2022-23.
The Indian economy grew at the slowest pace in 11 years at 4.2 per cent in 2019-20.
In a statement, S&P said, ‘While risks to India’s long-term growth rate are rising, ongoing economic reforms, if executed well, should keep the country’s growth rate ahead of peers.’
Affirming ‘BBB-‘ long-term and ‘A-3’ short-term foreign and local currency sovereign credit ratings on India, the agency said it ‘reflects the country’s above-average real GDP growth, sound external profile, and evolving monetary settings’.
It added: ‘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.’