Indian Finance Ministry officials met with representatives of the credit rating agency Standard & Poor (S&P) to seek a possible credit rating upgrade for the country, Press Trust of India has reported. The macroeconomic stability of the country was cited as one of the primary drivers for a possible upgrade.
The discussions with the credit rating major covered a range of issues from the rise in crude prices to the increasing revenue collection under Goods and Services Tax (GST).
There is a dissonance between government officials and representatives of the rating agency over the debt to GDP ratio of the country. While government officials have stated that debt to GDP should not be viewed from a short-term perspective, the rating agencies have expressed concerns that the current ratio is too high at 68.5 per cent.
Further, concerns are being expressed that rising crude prices combined with a sharp depreciation in the value of the rupee would lead to India breaching both the fiscal deficit and current account deficit (CAD) targets.
S&P has maintained India’s rating at BBB- which is the lowest investment grade and wants the debt to GDP ratio to fall below 60 per cent before an upgrade is considered.
It has been mandated by the Fiscal Responsibility and Budget Management (FRBM) committee that the combined Central and State debt to GDP ratio be brought down to 60 per cent by 2023.
Only time will tell whether discussions between the government officials and the credit rating agency bear fruit with an upgrade for India’s ratings.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.