India Gets S&P Upgrade: 'Motivation For Fiscal Prudence', Says CEA Nageswaran
The sovereign rating upgrade by S&P Global is a motivation for fiscal prudence path, Bloomberg reported quoting CEA Nageswaran as saying, after the global rating agency firm upgraded the south Asian nation's sovereign rating on Thursday.
S&P Global Ratings on Thursday upgraded India’s sovereign rating to 'BBB' from 'BBB-'—the first rating upgrade since 2017—with a stable outlook.
S&P said the upgrade reflects India’s buoyant economic growth and an enhanced monetary policy framework that anchors inflation expectations. “Together with the government’s commitment to fiscal consolidation and efforts to improve spending quality, we believe these factors have coalesced to benefit credit metrics,” it said.
The upgrade was long due, said Gurmeet Chadha, Complete Circle's Chief Investment Officer. “Especially when we’re grappling with a host of issues, India is the only market underperforming in the last couple of weeks with tariffs, while Japan, the US and Europe are hitting new highs,” he said.
A series of reforms, fiscal consolidation, and being the fourth largest and fastest growing economy—asking for more, deserve even better. This will have lots of long-term implications, including flows in bonds and a serious reduction in FPI selling. Long-duration bonds are the juiciest in terms of asset allocation right now.Gurmeet Chadha, chief investment officer at Complete Circle
The global rating agency firm, however, said that the ratings could be lowered if it sees a weakening in political commitment to consolidate public finances. Downward pressure could also come from a material slowdown in India’s structural economic growth that undermines fiscal sustainability.
