S&P affirms ratings on India at 'BBB-/A-3'; Outlook stable

NEW DELHI - Improvements in policymaking continue to strengthen prospects for India's economic and fiscal performance, but wide fiscal deficits, a heavy debt burden, and low per capita income detract from the sovereign's credit profile, says Standard and Poor’s.

The ratings agency today affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India.

“The stable outlook balances India's sound external position and inclusive policymaking tradition against the vulnerabilities stemming from its low per capita income and weak public finances,” S&P said.

S&P said India's governing parties had made progress in building consensus on the passage of laws to address long-standing impediments to the country's growth.
 
These include comprehensive tax reforms through the likely introduction in the first half of 2017 of a goods and services tax to replace complex and distortive indirect taxes.

Other measures include strengthening the business climate (such as through simplifying regulations and improving contract enforcement and trade), boosting labour market flexibility, and reforming the energy sector, S&P said.

“We believe these measures, supported by India's well-entrenched democracy, will promote greater economic flexibility and help redress public finances over time. India's external position remains a credit strength.” www.standardandpoors.com (ATI).