S&P retains India’s rating at lowest for investment

New Delhi: Global ratings agency Standard & Poor’s (S&P) on Tuesday affirmed its rating for India’s long-term foreign currency and local currency sovereign credit at the lowest investment grade and retained the outlook as stable, saying the economy will recover following the resolution of the Covid-19 pandemic, and that the country’s strong external settings will act as a buffer against financial strains despite elevated government funding needs over the next 24 months.

This is the 14th consecutive year when S&P has affirmed India’s rating at the lowest investment grade.

The agency retained the long-term rating at BBB(-). The latest statement from S&P ends anxiety over the sovereign ratings running the risk of being downgraded, following the expansion of spending to help the economy recover from the impact of the Covid-19 pandemic.

Explaining the rationale for its decision, the agency said that the sovereign credit ratings on India reflect the economy’s above-average long-term real GDP growth, sound external profile, and evolving monetary settings. “These strengths are balanced against vulnerabilities stemming from the country’s low per capita income and weak fiscal settings, including consistently elevated general government deficits and indebtedness,” the agency said.