Standard and Poor's raises India's credit outlook to stable from negative

The global rating agency S&P has raised India’s sovereign rating outlook to stable from the earlier negative. The rating improvement makes India a more viable and safer investment avenue for foreign investors. With this move, all three credit rating agencies now predict a stable outlook for India, even though it still has the lowest investment grade rating. The sovereign rating remains constant at BBB- for long term and A3 for short term.
The change is believed to have been caused by the strong political mandate given by the Indian populace to the current Central Government and the improvement in India’s external account. The new government’s move to emphasize fiscal discipline while promoting greater economic growth has inspired confidence. However, S&P has warned that failure to implement proposed reforms or deterioration in the economic scenario could trigger a downgrade.
The outlook for four Indian and six private companies that are linked to India’s sovereign rating have also been raised to stable.
An upgrade in rating is possible if the economic and fiscal indicators improve further. Also, the economy must show a real per capita GDP growth rate of at least 5.5%

Month: Current Affairs - September, 2014