S&P Global Ratings has affirmed its lowest investment-grade sovereign rating at ‘BBB-’ and stable outlook for India maintaining that the country’s recovery will gain pace through the second half of fiscal 2022 and the following year. “The stable outlook reflects our expectation that India’s economy will recover following the resolution of the COVID-19 pandemic,” S&P said.
It has projected the economy to grow at 9.5 per cent in FY22 over a very weak base of record 7.3 per cent contraction in FY21.
However, the rating agency warned that it may lower the ratings if the country’s economy recovers significantly slower than it expects from FY22 onwards or net general government deficits and the associated accumulation of indebtedness materially exceed its forecasts, signifying a weakening of India’s institutional capacity to maintain sustainable public finances. It warned that fiscal settings are weak, and deficits will remain elevated.