By SK.Vyas:
Chandigarh, June13, 2020: India’s economy is likely to achieve a strong recovery following the contraction in this fiscal year, with real GDP growth at 8.5% in fiscal 2022. S&P Global Rating has forecast this while retaining India’s sovereign rating at the lowest investment grade of ‘BBB-‘. The outlook on the long-term rating is stable. It has also said that the Indian economy and its fiscal position will remain stable and will begin to recover from 2021. The stable outlook reflects our expectation that India’s economy will recover following the containment of the COVID-19 pandemic, and the country will maintain its sound net external position, says the Global Rating Agency.
Expressing its confidence in the long term growth of India, it says a strong mandate for the present Government in the 2019 parliamentary elections should provide sufficient political capital to push further reforms, but execution remains the key. India’s wide range of structural trends, including healthy demographics and competitive unit labour costs, work in its favour.
The Government of India in May made a series of announcements under “Aatma Nirbhar Bharat Abhiyan” to provide stimulus to the economy. Referring to these, the Global Rating agency says these stimulus reforms will support economic growth over the long-run. However, it cautions that lower revenues resulting from the corporate tax cuts, and much weaker economic activity this year, will continue to undermine the government’s fiscal position.
The government’s ability to consolidate its finances once the economy begins to recover will be the key in determining the sustainability of India’s debt stock, according to the agency. The ratings on India reflect the country’s above-average real GDP growth, sound external profile, and evolving monetary settings.
S&P Global Ratings affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited foreign and local currency sovereign credit ratings on India.