Ajay Seth, Secretary, Department of Economic Affairs spoke about India’s credit rating being in a lowly grade despite the country’s growth rate and the roadmap to fiscal consolidation. He said despite the rating now, the agencies will upgrade India in the time to come, considering its performance.
Speaking to Business Today TV, Seth was responding to a question on if the rating agencies and global analysts have failed to read the intent and the actual fine print of the numbers even though India has been one of the only countries to remain on a path of steady fiscal consolidation.
“Rating agencies do what they are supposed to do. It is our effort to show performance and our commitment for consolidation as well as meeting our development needs and trying to convince them. If you recall over the past 18 months several of them have upgraded the stance and outlook to positive one. I’m sure that at some point of time they will be ready for an upgrade as well,” said Seth.
In May last year, S&P Global Ratings revised its outlook on India to positive from stable, while retaining its ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited foreign and local currency sovereign credit ratings. It said that they believe the “continued policy stability, deepening economic reforms, and high infrastructure investment will sustain long-term growth prospects”. The agency also spoke of India’s cautious fiscal and monetary policy, diminishing the government’s elevated debt and interest burden while bolstering economic resilience. It said India could see a higher rating in the next 24 months.
Moody’s currently maintains India’s sovereign rating at ‘Baa3’ with a stable outlook. Its Senior Vice President Christian de Guzman said that while they view the government’s sustained fiscal discipline and narrower fiscal deficits as credit positive, they don’t expect these improvements in the debt burden or ‘debt affordability’ to be enough to trigger a sovereign rating upgrade at this time.
Fitch Ratings, in August last year, affirmed India’s ‘BBB-’ rating on the back of a stable growth outlook and fiscal credibility citing the country’s robust medium-term growth prospects and solid external finance position.
Seth further added that India is not experiencing a slowdown but a moderation. Even growing at 6-6.4 per cent in a global economy that’s not doing too well, India’s growth is a “decent one”, he said.
“Though our needs and our potential are much larger. So, what Budget 2025 tries to do is to address the domestic factors and create more and more conditions so that the domestic factors are the primary drivers of our economy, in terms of investing into people, economy, innovation and not to forget the largest employment generating sectors, employment growth both in agriculture as well as MSME. So this is a complete package,” he said.