S&P Global retains India’s sovereign rating

MUMBAI • S&P Global Ratings reaffirmed India’s sovereign rating and maintained the stable outlook, contradicting Moody’s Investor Service Inc that upgraded the country recently.

The rating was unchanged at BBB-/A-3 with a stable outlook, which S&P said reflected India’s strong gross domestic product growth and improving monetary credibility. The country remains at the lowest investment grade, even as Moody’s action raised the country one notch above.

S&P’s move disappointed the administration led by Prime Minister Narendra Modi that had been expect- ing an upgrade on the lines of Moody’s, which raised Asia’s No 3 economy for the first time in 14 years.

Even as sweeping changes such as demonetisation and a national sales tax had imperiled revenues and threatened the region’s widest budget deficit, Moody’s decision was a bet that the overhaul has brightened India’s prospects.

The central bank will decide on interest rates on Dec 6 and the government is expected to unveil its budget for the year starting April 2018 in early February.

This will probably be the last full budget before Modi faces re-election the following year. — Bloomberg