Union Minister Piyush Goyal on Friday said that the latest report by ratings agency Standard and Poor’s (S&P) on India’s sovereign ratings is “very satisfying”, according to news agency ANI.
"All in all, it is a very satisfying report. It shows that the economy is strong and is improving further. As per their projection, pace of development will accelerate further in 2018-20," ANI quoted the Railways Minister as saying.
Goyal added that S&P had suggested that the Modi government had been "successful in making transformational changes possible," in spite of "hurdles" in the Upper House of Parliament, that is, the Rajya Sabha.
"They have reflected on the successes of Modi government in state elections and have actually predicted that following the series of successes in 2017 state elections, they expect many more successes in state elections in coming months. So, in some sense, they gauged the mood of India," Goyal said.
Meanwhile, the Finance Ministry expressed relief that the S&P had not downgraded India’s sovereign ratings.
"S&P has not downgraded (India), S&P has also confirmed the investment grade. So, I don't see that there will be any opposite influence in our costs or otherwise because of the ratings," Subhash Chandra Garg, Secretary of Department of Economic Affairs, told the media here.
"There is no question of going back to the old position. Even before, the market used to view India in a better position while compared to the ratings reactions. If you look at our borrowing cost, it was better in terms of ratings even before. Moody's reaction gave more confidence to the markets," he added.
On the same lines, the Ministry of Finance tweeted: "Ratings on India reflect the country's strong GDP growth, sound external profile and improving monetary credibility... These strengths are balanced against vulnerabilities stemming from country's low per capita income and relatively high general government debt stock, net of liquid assets."
On Friday, ratings agency S&P maintained India's sovereign ratings at BBB- with stable outlook.
"S&P Global Ratings affirmed its unsolicited long and short-term foreign and local currency sovereign credit ratings on the Republic of India at 'BBB-/A-3'. The outlook is stable," the agency said in a statement.
It said the stable outlook reflects its view that, over the next two years, growth will remain strong, India will maintain its sound external accounts position and "fiscal deficits will remain broadly in line with our forecasts".
Garg pointed out that the debt-to-GDP ratio had been policy preference of the government.
"Controlling the fiscal deficit and achieving higher growth -- these are the two elements to reduce the debt-to-GDP ratio. Also, that is what the government has been doing, raising the growth as well as containing the fiscal deficit. That is the route," Garg told reporters.
"It takes a while for these things to bring down. The path suggested to go to 60 per cent is what the government's direction in any case has been. So consciously or not, that is the path the government has taken," he added.
Saying the rating would not have much impact on the stock markets when it opens on Monday, Garg said: "There are several factors which work on the bond yeilds, this is not the only one. I don't expect anything particular on Monday."