S&P betters India’s credit outlook to stable from negative

S&PNEW DELHI: Standard & Poor’s today improved India’s outlook to stable from negative saying the new political formation at the Centre has the capacity to push reforms and put the country back on high growth trajectory.

“We could raise the rating if the economy reverts to a real per capita GDP trend growth of 5.5 per cent per year and fiscal, external, or inflation metrics improve,” the global rating agency said.

The revision in outlook comes ahead of Prime Minister Narendra Modi high profile visit to the US, which among things is aimed at procuring investments. Modi is scheduled to meet top US corporates.

The stable outlook, it said, reflects the agency’s expectation that the newly elected government will be able to implement reforms that spur growth, which in turn improves fiscal performance.

S&P has affirmed the ‘BBB-/A-3’ sovereign credit rating on India and revised the outlook on the long-term rating to stable from negative. Stable outlook reduces risk of any possible sovereign rating downgrade.

“The stable outlook for the next 24 months reflects our view that the new government has both the willingness and capacity to implement reforms necessary to restore some of India’s lost growth potential, consolidate its fiscal accounts, and permit the RBI to carry out effective monetary policy,” it added.

S&P also cautioned that it could lower the rating in case the government’s structural reform agenda stalls such that economic growth does not accelerate, or fiscal and debt ratios fail to improve.

After taking over as Prime Minister in May, Modi has launched host of initiatives, including ‘Make in India’ campaign to ease business environment and fetch FDI. -PTI

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