S&P Global added that solid consumer and investment dynamics will propel India’s real gross domestic product (GDP) growth to 6 per cent in fiscal 2024
New Delhi, NFAPost: Rating agency S&P Global has affirmed BBB- long-term and A-3 short-term foreign and local currency sovereign credit ratings on India. The outlook on the long-term rating has been kept stable.
“The stable rating outlook reflects our expectation that India’s sound economic fundamentals will be sufficient to offset the government’s weak fiscal performance, helping to sustain elevated government funding needs and a high-interest burden over the next 24 months,” it said.
It added that India’s economy is performing well amid challenging global conditions and it anticipates the country’s sound fundamentals to underpin growth over the next two to three years.
S&P Global added that solid consumer and investment dynamics will propel India’s real gross domestic product (GDP) growth to 6 per cent in fiscal 2024 and 6.9 per cent in fiscal years 2025 and 2026.
It, however, added that India may see a high fiscal deficit for some time.
“India differs from most regional and global peers in that its state and local governments also run persistently high deficits. We anticipate that aggregate state shortfalls will decline to below 3 per cent of GDP by fiscal 2025. Nevertheless, in combination with central government deficits that will track above 4.5 per cent of GDP, we forecast India will maintain high general government fiscal shortfalls averaging 8 per cent of GDP through fiscal 2027,” it said.
Owing to falling inflation in India, the agency said that sustained deceleration in price growth may allow the Reserve Bank of India (RBI) to conclude its monetary tightening campaign, and consider a moderately easier stance before the end of fiscal 2024.
