S&P affirms India’s sovereign rating with stable outlook

World’s biggest rating agency S&P has affirmed its BBB-/A3 rating in India with a stable outlook. The ratings reflect the country's sound external profile and improved monetary credibility, S&P said. Rating assigned to India is the lowest investment grade rating just above the junk status.

Citing has improved the monetary stability, and the sound external profile is a major plus, says the ratings agency in its India outlook report. "India's strong democratic institutions and a free press, which promote policy stability and predictability, also underpin the ratings."

The floating exchange rate and limited reliance on external savings to fund its growth are its major external strengths. The agency expects the current account to register a moderate deficit of 1.4 percent in 2016.

S&P expects India's GDP growth of 7.9% in 2016 and 8% on an average over 2016-2018.

Lastly the report says ‘Upward pressure on the ratings could build if the government's reforms markedly improve its general government fiscal out turns, and with them, the level of net general government debt so that it falls below 60% of GDP.'