S&P keeps India’s sovereign rating unchanged at ‘BBB-’

Source: The Hitavada      Date: 25 Nov 2017 11:25:30


Nov 24,


DECLINING to follow Moody’s recent India rating upgrade, Standard & Poor’s on Friday kept its sovereign rating for the country unchanged at the lowest investment grade of ‘BBB-minus’ citing high Government debt and low income levels. The Government, which had expected an upgrade following Moody’s last week giving India the highest rating since 1988, termed the move as “unfair”, calling S&P a “conservative” rating agency which had decided to play “cautious”. Changing its outlook about India to “stable” from “negative” in 2014, S&P Global Ratings said country’s ‘BBB-minus’ rating reflected its strong GDP growth, sound external profile and improving monetary credibility.But sizable fiscal deficits, a high net general government debt burden and low per capita income detracted from the sovereign’s credit profile, it said in a statement.

“The stable outlook reflects our view that over the next two years, growth will remain strong, India will maintain its sound external account position and fiscal deficits will remain broadly in line with our expectations,” it said.While Moody’s had on last Friday raised India’s sovereign rating from the lowest investment grade of ‘Baa3’ to ‘Baa2’ -- the
first upgrade in almost 14 years, and changed the outlook from stable to positive, S&P has kept India at the current rating of ‘BBB-minus’ since 2007.

S&P’s highest ever rating for India stood at ‘BBB’ in 1990 from which it was downgraded in March 1991. In January 2007, S&P had raised sovereign credit ratings on India to ‘BBB-’ with a stable outlook, from ‘BB+’.Fitch Ratings’ current rating of ‘BBB’, a notch above junk status, stands as its highest ever.Sanjeev Sanyal, Principal Economic Adviser, termed the rating unchange as “a bit unfair” saying the low per capita income was “neither a reflection on our ability nor our willingness to pay debt”.

While Economic Affairs Secretary, Subhash Chandra Garg said that S&P opted “to play a little cautious”, Railway Minister, Piyush Goyal said the rating agency was known worldwide to be a far more conservative when compared with Moody’s or Fitch.S&P, Garg said, had said “about every thing which Moody’s have also” talked about, like India’s structural reforms, growth story, and institutional reforms, including demonetisation.“We are not disappointed but our expectation would be that S&P also takes into account what the Government has done,” he said.