S&P differs from Moody’s, keeps rating unchanged

New Delhi, November 24 

Credit rating agency Standard & Poor’s today kept its sovereign rating for India unchanged at ‘BBB-minus’ with a ‘stable’ outlook, saying vulnerabilities stemming from low per capita income and high government debt balance strong GDP growth.

The government, which was “expecting” an upgrade following one by Moody’s last week, was quick to term it “unfair”. Moody’s Investors Service raised India’s sovereign rating for the first time in 13 years on growth prospects.

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S&P said India’s rating reflects its strong GDP growth, sound external profile and improving monetary credibility. These, it said, are “balanced against vulnerabilities stemming from the country’s low per capita income and relatively high general government debt stock”.

“The stable outlook reflects our view that over the next two years, growth will remain strong, India will maintain its sound external account position and fiscal deficits will remain broadly in line with our expectations,” it said.

Sanjeev Sanyal, Principal Economic Adviser, termed the unchanged rating “a bit unfair”, saying the low per capita income is “neither a reflection on our ability or our willingness of paying debt”.

Economic Affairs Secretary SC Garg said S&P chose to play cautious and hoped the reforms will reflect in a ratings upgrade next year. “Our expectation would be that S&P also takes into account what the government has done,” he said, adding that  S&P has said everything that Moody’s also stated in its rating upgrade.

Railways and Coal Minister Piyush Goyal said S&P has been historically more conservative. “Upward pressure on the ratings could build if the government’s reforms markedly improve its net general government fiscal outturns and so reduce the level of net general government debt,” S&P said. 

In January 2007, S&P had raised sovereign credit ratings on India to ‘BBB-’ with a stable outlook, from ‘BB+’. The ‘BBB’ rating is a notch above junk status. — TNS/Agencies