S&P retains investment grade for India

MUMBAI: International rating agency Standard & Poor���s (S&P) has reaffirmed India���s ratings despite the flight of capital and upward pressures on the fiscal deficit. In a statement issued from Singapore, the rating agency said that it has reaffirmed its ���BBB-��� long-term and ���A-3��� short-term sovereign credit ratings on India. The outlook on the long-term rating remains stable.

���The ratings on India reflect the country���s strong economic growth prospects and its deep government debt market, which helps accommodate its weak fiscal position,��� S&P said. The agency cautioned of a downgrade if further fiscal slippage, a marked decline in external liquidity indicators, or policy measures that weaken economic growth prospects.

���India���s economic prospects remain strong with growth likely to average more than 7% in the medium term,��� said S&P credit analyst Takahira Ogawa. ���Underpinning that growth is the gradual deregulation of the industrial sector, continued trade liberalisation, a dynamic service sector, and modest improvements in infrastructure.���

According to S&P, buoyant private and public investments with some progress in economic reforms, India���s business environment is likely to improve in the years ahead, notwithstanding the current dislocations in global credit markets. ���Its economic growth has benefited from higher consumption and private investment, due to a growing middle class and favorable demographics��� the report said Monetary and financial reforms, coupled with strict fiscal financing regulations, have led to more robust financial and government securities markets.