Rating agency Standard & Poor's said India must
boost growth, cut its fiscal deficit and fulfill promises of financial and
fiscal reforms in order to justify an upgrade in a credit rating, currently
lodged one rung above junk bond territory.
The agency, in a news release issued listed what it
needed to see to upgrade India's sovereign debt credit rating from 'BBB-minus'.
"Crucial factors include higher growth in real
per capita GDP, stronger fiscal and debt metrics, and a stronger external
position or improved monetary policy setting, and the government's ability to
fulfil its promises on key reforms will be critical to the country's
success," S&P said.
S&P said it did not expect swift progress on
fiscal consolidation, and if this was the sole consideration India would have
to wait several years before an upgrade.
"Improvements in India's weak fiscal balance
sheet are likely to be gradual and are thus unlikely to lead to a rating
upgrade in the next three to five years," S&P said, adding that the
country's fiscal and debt indicators are the weakest among peers like Brazil
and Indonesia.
First Budget of the Modi government will be closely
watched for pro-growth measures, reforms for the power sector and other areas
of infrastructure, as well as fiscal consolidation.
S&P raised India's credit rating outlook to
'stable' from 'negative' in September, citing the prospect of reforms.
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