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

If Rahul is in race to prove himself a better Hindu, our efforts have paid off: Ram Madhav

Ram Madhav, a member of the RSS National Executive, has said that Congress leader Rahul Gandhi proudly proclaiming to be a better Hindu is a welcome step and the opposition’s newfound claim that their Hinduism is superior to the Hinduism of RSS is the new competition in India.   &nbs

SRE is a mindset

In 2010, I attended a self-development program called ‘Seven Habits of Highly Effective People’.  This program deeply impacted me, and I underwent a life-changing experience. Stephen Covey writes, “The way we see the problem is the problem.” We must allow ourselves to undergo p

“But for Nehru’s non-alignment, India would’ve been where China is today”

Dark Secrets: Politics, Intrigue and Proxy Wars in Kashmir By Iqbal Chand Malhotra Bloomsbury, 277 pages With his latest work, ‘Dark Secrets’, scholar and media personality Iqbal Chand Malhotra continues the investigation he began with

Maharashtra schools to reopen on January 24

Maharashtra has announced the reopening of schools for classes 1-12 from January 24 with Covid protocols. Education minister Varsha Gaikwad said on Thursday that the government will reopen schools for classes 1-12th with Covid protocols from January 24. “We have also decided to open p

No irregularly in appointment of engineer: BMC counters BJP MLA

The BrihanMumbai municipal corporation (BMC) has rejected BJP MLA Ameet Satam’s demand in a letter to BMC commissioner Iqbal Chahal to cancel the appointment of Sunil Rathod, deputy chief engineer, building and proposal department, western suburbs, for getting caught red-handed accepting bribe by ACB

Cast your vote, not vote for caste

Once the schedule for the next assembly elections has been announced, there is a flurry of activity around building caste coalitions. This is more intense in the most populous state,  Uttar Pradesh, which is the most important state in India in any election, in view of its large population estimated a

Visionary Talk: Ram Madhav, Member Rashtriya Swayamsewak Sangh with Kailashnath Adhikari


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter