New Delhi: The government on Tuesday said that ratings agency S-P Global has reaffirmed Indias sovereign rating at BBB- with stable outlook and it expects Indias economy to continue to outperform its peers along with strong growth over the next two years.S-P has reaffirmed sovereign rating of India at BBB- with stable outlook.
They have stated that Indias economy continues to achieve impressive long-term growth rates despite a recent deceleration, economic affairs secretary Atanu Chakraborty said in a tweet.Last month, Moodys lowered the outlook on Indias rating to negative from stable citing a prolonged economic slowdown,worsening shadow banking crunch, rising public debt, financial stress among rural households and weak job creation.S-P expects the Indian economy to continue to out-perform its peers and that the growth will remain strong over the next 2 years, Chakraborty said in another tweet.The reiteration comes days after official data showed Indias economy growing 4.5% in the July-September quarter, the slowest pace of expansion in over six years, pulled down by manufacturing, which saw a 1% contraction in gross value added against a 6.9% rise in the corresponding quarter last year.Looking beyond the gloom and doom, the big picture that emerges for the medium run remains promising--with about 7% annual growth, S-P Global Ratings said in a report titled Asia-Pacific quarterly: The Cost of UncertaintyHowever, stating that India's growth continues to surprise on the downside,the New York-headquartered ratings agency cautioned that with core inflation falling sharply; this is clearly a substantial weakening in demand.Weakness in the real sector and stress in the financial sector are feeding into each other, pulling growth down, it said.Retail inflation accelerated to a 16-month high in October and breached the Reserve Bank of India's medium-term target of 4% for the first time since July 2018 as food prices increased.
Core inflation - excluding volatile energy and food items - declined to a 94-month low of 3.47% in October.
Core inflation is seen as a measure of demand and its decline suggests weak consumer sentiment.S-Ps reaffirmation of the Indian economy comes ahead of the RBIs monetary policy announcement on December 5 wherein it is widely expected to cut rates to spur the slowing economy.The central bank has already cut its key policy rate by 135 basis points since January.
A basis point is 0.01 percentage point.
The ratings agency said the report does not constitute a rating action.