The FINANCIAL — Standard & Poor’s on Monday reaffirmed its stable outlook on India’s BBB-minus long-term debt rating, saying the country’s external position is a source of strength for its credit profile although public finances are still weak, according to Nasdaq.
“The outlook indicates that we do not expect to change our rating on India this year or next based on our current set of forecasts,” S&P said in a statement.
The rating firm said improvements in policy-making have boosted India’s economic prospects. However, the country’s wide fiscal deficit and low per capita income detract from its credit profile.
The country’s growth is outperforming its peers and picking up modestly, S&P said, predicting the South Asian economy would expand 7.4% in 2015 and just under 8% on average between 2015 and 2018.
“That said, we believe that domestic supply-side factors will increasingly bind economic performance, and we note that the government has little ability to undertake countercyclical fiscal policy given its current government debt load,” the company said.
All the three major global rating firms–S&P, Fitch Ratings and Moody’s Investors Service–rate India’s debt at the lowest investment grade. S&P and Fitch have a stable outlook, although Moody’s in April raised its view to positive from stable.