Standard and Poor’s said that the economy can see a growth of 9.5 percent in the second quarter of the current financial year. It has maintained its sovereign rating “BBB-” for the 14th year in a row and maintains a stable outlook.
Strong foreign exchange reserves essential.
S&P ratings: S&P Global Ratings has maintained India’s rating for the 14th year in a row at the lowest investment grade level of BBB- (Triple B minus) and has described the future prospects as stable. The rating agency has said that the government will need more additional funds during the next 24 months, but India’s strong foreign exchange reserves will act as a buffer against financial pressure.
S&P Global Ratings said that this level of India’s government fiscal creditworthiness will reflect the country’s economy being above average for long-term real gross domestic product (GDP) growth, against the backdrop of strong external conditions (foreign exchange reserves), new emerging monetary conditions. reflects. The rating agency said that India’s democratic institutions promote policy consistency and consensus and support ratings. But this strength of the country is challenged by the low level of per capita income and weak fiscal position.
The growth rate will be 9.5 percent in the second half of the current financial year.
S&P Global Ratings estimates that economic activity in India will be normal in the remaining fiscal year 2021-22. With this, the growth of real GDP of 9.5 percent will be achieved. The rating agency said that a significant part of this will be achieved due to the impact of the low comparative base of the previous financial year (compared to the economic growth below zero). The Indian economy has declined by 7.3 percent in 2020-21.
Fiscal position weak but government is taking measures
S&P said that India’s fiscal position is weak. Although steps will be taken by the government to strengthen it, but it will remain so for a few years now. S&P has maintained India’s long-term BBB- and short-term unreported foreign and local currency sovereign ratings at A-3.
Economy will recover from COVID Crisis
The rating agency said that the stable outlook reflects our expectation that the Indian economy will recover after the COVID-19 epidemic. The strong external position of the country will act as a buffer for the financial pressure. However, during the next 24 months, the government will need additional funds.
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