By Nitin Waghela
Copyright republicworld
After S&P Global upgraded India’s sovreign rating to ‘BBB’ from ‘BBB-‘, Rating and Investment Information, Inc. (R&I), has now elevated the south Asian nation’s long-term sovereign credit rating to ‘BBB+’ from ‘BBB’.The Japanese credit rating agency also retained “Stable” Outlook for the Indian economy post Morningstar DBRS’ upgrade to ‘BBB’ from ‘BBB Low’, strengthening a positive outlook on the backs of consistent resilience.As per R&I’s India sovereign rating review published today, the ratings upgrade is supported by India’s position as one of the world’s largest and fastest-growing economies, underpinned by its demographic dividend, robust domestic demand, and sound government policies.R&I in its report noted the progress in fiscal consolidation by the centre, driven by buoyant tax revenues and rationalisation of subsidies, and manageable level of debt along with high growth.It also highlights India’s strengthened external stability, reflected in modest current account deficit, stable surpluses in services and remittances, low external debt-to-GDP ratio, and sufficient forex cover.The agency further stated that the risks associated with the financial system remain limited.“While the government has been increasing capital expenditures, it has managed to reduce the fiscal deficit thanks to the tax revenue increase backed by the strong domestic demand as well as the cut of subsidies”, the credit rating agency said.The recent increase in tariffs by the U.S. was acknowledged as a risk factor by the agency, however, it observed that India’s limited reliance on U.S. exports and its domestic demand-driven growth model will contain the impact.Further it observed that while the GST rationalisation will result in revenue losses, the negative impact will likely be offset to some extent by the stimulation of private consumption.The agency also praised the policies of the administration of Prime Minister Narendra Modi aimed mainly at attracting foreign manufacturers to India, developing infrastructure, institutionalizing the legal framework to improve the business environment, reducing the reliance on energy imports and ensuring the economic security.This is the third credit rating upgrade India has got this year from S&P, Morningstar DBRS and R&I displaying global confidence in India’s medium-term growth prospects amid prevailing global uncertainties.
