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

A trowelful of empowerment

When her husband died last year, 60-year-old Chakkamma was not sure whether she would be able to have some money of her own: she has a son who looks after her, but she wanted to maintain a degree of independence. Opportunity came knocking when the Tamil Nadu government, as part of its Pudhu Vaazhvu (or new

Should Shiv Sena MP Ravindra Gaikwad be arrested for assaulting an Air India employee?

Should Shiv Sena MP Ravindra Gaikwad be arrested for assaulting an Air India employee?

Railways suffered over Rs 33,000 crore loss on passenger service: CAG

  The Railways was unable to meet its operational cost of passenger and other coaching services. During 2014-15, there was a loss of Rs 33,821.70 crore on passenger and other coaching services. The freight services earned a profit of Rs 38,312.59 crore which indicated that 88.28 percent

“Return land to tribals after mining is over”

Seasoned BJP parliamentarian Nand Kumar Sai, who took charge as the chairperson of the National Commission for Scheduled Tribes (NCST) on February 28, has his work cut out for him. Archana Mishra caught up with Sai, 71, on his first day in office where he

Should there be automatic termination as member of parliament if that person takes oath as minister/chief minister in a state?

Should there be automatic termination as member of parliament if that person takes oath as minister/chief minister in a state?

Ganga, Modi and people’s unwavering faith

When the truth was a few steps away from Modi’s gaze In November 2014, prime minister Narendra Modi made his first visit to his constituency Varanasi and launched a massive cleanliness drive at Asi ghat, which was covered in mud and silt. When locals sa

Video

जानिए क्या है ओबीसी आयोग

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter