May 30 (Punjab Khabarnama) : Good news for Indian economy. Rating agency S&P (S&P) on Wednesday has made its outlook for the Indian economy from stable to positive. Also, the overall rating has been maintained at ‘BBB-‘. ‘BBB-‘ is the lowest investment grade rating. S&P said, ‘India’s strong economic growth has had a positive impact on credit metrics.’ The rating agency said, ‘India’s fiscal deficit has widened but consolidation efforts continue. We are hopeful that India’s fundamentals will help sustain growth over the next 2-3 years.’
The rating will be increased if the losses are reduced
The agency said it may raise India’s rating if the fiscal deficit comes down. The Government of India expects to reduce the fiscal deficit to 5.1 percent of GDP in FY2025 from 5.8 percent in FY2024. According to the roadmap for fiscal consolidation, the deficit will be reduced to 4.5 percent by 2025-26. Fiscal deficit is the difference between government expenditure and revenue.
Spending on infrastructure will accelerate growth
S&P said, “Government spending on infrastructure will accelerate India’s growth path. We expect India’s reforms to continue regardless of the election outcome.” The country is currently voting for the 18th Lok Sabha elections, with Prime Minister Narendra Modi’s return to the Center for a third consecutive term increasingly likely.
Rating maintained at ‘BBB-‘
In May last year, S&P Global Ratings had maintained India’s sovereign rating at ‘BBB-‘. It also gave a stable outlook on growth but flagged weak fiscal performance and low GDP per capita as risks. Ratings given by rating agencies are viewed by investors as factors influencing a country’s creditworthiness and cost of borrowing.
