Jaitley’s budget not going to increase India’s ratings

Higher country ratings are important to attract investment and raise investors’ confidence

GN Bureau | March 2, 2015


#budget   #arun jaitley   #standard and poor’s   #raing   #debt   #deficit   #reforms  


Despite finance minister Arun Jaitley’s good budget the country’s ratings are not likely to change due to subsidies, debt and missing reforms.The budget has in fact slowed the pace of fiscal consolidation.

International ratings agency Standard & Poor's does not expect an upgrade to India's sovereign debt rating in the next year in the absence of substantial, quality reforms.
"India's 2015-2016 budget highlights the government's commitment to keeping the fiscal deficit low despite lower-than-expected revenue growth," S&P said in a statement on Monday.

"This commitment moderates the drag on sovereign credit support posed by the relatively heavy general government debt burden in India," it added. "Nevertheless, the debt burden and large budgetary subsidies could constrain the speed of improvements in India's credit metrics."

The ratings agency said the quality of fiscal consolidation was not as good as it could have been on structural front, after a deadline for cutting the fiscal deficit to 3 percent by a year was put off to 2017/18.

S&P currently rates India at "BBB-minus", its lowest investment grade rating, with a "Stable" outlook.

The credit rating of a country gives investors insight into the level of risk associated with investment in a particular country. A good sovereign credit rating is usually essential for developing countries in order to access funding in international bond markets.

The credit ratings also impact bonds in external debt markets and foreign direct investment.
“India needs to at least strengthen two of its macroeconomic metrics on growth, inflation and fiscal health,” said Kim Eng Tan, Senior Director, Asia-Pacific Sovereign Ratings for Standard & Poor's.

"However, again, (a) very big improvement is unlikely to come through in next year or so. We don't see the rating going up in the next year or so," Tan felt.

Comments

 

Other News

Goa Shipyard and MTU, Germany to manufacture MTU engines in India

Goa Shipyard Ltd (GSL) and MTU, Germany have agreed to cooperate in the  local manufacturing of technologically-advanced MTU series 8000 engines in India. Under the agreement, which was signed at India’s leading defence trade show Defexpo-18, the companies will manufacture the 16-

ONGC employees bag 13 medals at the Gold Coast CWG

ONGC sportspersons outshone other participants in their respective categories in the recently concluded Commonwealth Games in Gold Coast, Australia. ONGCians bagged 13 medals including 5 Gold, 3 Silver and 5 Bronze, contributing to the 66 medal tally of Team India. ONGCians Ragala Venkat Rah

BHEL bags renovation and modernisation order

Bharat Heavy Electricals Limited (BHEL) has bagged an order for the renovation and modernisation (R&M) of electrostatic precipitators (ESP) at Ramagundam super thermal power station. The Rs 137 crore-turnkey-order envisages carrying out R&M of ESPs of three units of 200 MW each at Ra

Congress’s real agenda is Save Dynasty: Amit Shah

As the Congress leads a bunch of opposition parties in preparing to move an impeachment motion against the chief justice of India, Dipak Misra, BJP president has said its real agenda is not to save the constitution but to save the “dynasty”. Shah has turned to Facebook, posting a

On World Book Day, how about a dip into India’s REAL best-sellers?

There are a few fortunate people for whom every day is a World Book Day, but for the rest it comes once in a year. There are all sorts of international days of this and that, but thanks to social media people are acquiring the habit of wishing and celebrating this or that day these days. Those who’d

First phase of PMUG project likely to be completed before deadline

GAIL (India) Limited has placed pipe laying orders of Rs 780 crore for around 530 km of pipeline connectivity from Bokaro to Angul for Jagdishpur-Haldia & Bokaro-Dhamra Natural Gas Pipeline (JHBDPL) project. With this, major contracts of the project, i.e. pipe supply and laying contract orders for 2200

Current Issue

Current Issue

Video

CM Nitish’s convoy attacked in Buxar

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter