FM Nirmala Sitharaman welcomed S&P's revision of India's outlook from stable to positive

May 29, 2024

New Delhi [India], May 29 : Welcoming the revision of India's outlook in S&P Global Ratings from from stable to positive, Finance Minister Nirmala Sitharaman on Wednesday said it "reflects country's solid growth performance and a promising economic outlook."
On Wednesday, S&P Global Ratings changed its rating outlook for India from stable to positive and stated that the rating agency expects fiscal and economic reforms to continue regardless of the results of the Lok Sabha election.
"S&P Global Ratings' revision of its outlook on India from 'stable' to 'positive' is a welcome development. This reflects India's solid growth performance and a promising economic outlook for the coming years. It has been possible due to the series of macroeconomic reforms undertaken since 2014, along with substantial outlay for capex, fiscal discipline, and decisive & visionary leadership. As envisioned by Hon'ble PM Shri Narendra Modi, India is well on track to become the third-largest economy in the third term of the government and become a ViksitBharat by 2047, she said in a post on social media platform X (previously Twitter).
S&P Global, in March this year, upped the country's growth forecast by 40 basis points to 6.8 per cent during Fiscal Year 2024-25.
"Our positive outlook on India is predicated on its robust economic growth, pronounced improvement in the quality of government spending, and political commitment to fiscal consolidation. We believe these factors are coalescing to benefit credit metrics," the rating agency said in a statement.
S&P underscored that the country's credit metrics are benefiting from its strong economic growth. For the next two to three years, it anticipates that strong economic fundamentals will support the growth momentum.
Going forward, the agency stated that if the nation's fiscal deficits significantly reduce and the net change in total government debt falls below 7 per cent of GDP on a structural basis, it may decide to upgrade the ratings.
Further, according to S&P, real GDP growth in the past three years has averaged 8.1 per cent annually, the highest in the Asia-Pacific region.
The total size of the country's economy is now estimated to be 46 per cent larger (in rupee terms) than it was pre-COVID.
The Indian government has long been a critic of the methodologies adopted by credit rating agencies, characterising them as opaque and potentially discriminatory against developing economies like India.
The matter got so intense that the Finance Ministry outlined the biases of the rating agencies by issuing a document titled "Re-examining Narratives: A Collection of Essays," written by Chief Economic Advisor V Anantha Nageswaran.