New York: Global rating agency Standard & Poor’s on Friday revised India’s credit outlook to “stable” from “negative”, acknowledging the improved economic environment in Asia’s third largest economy.
Between April and June 2014, India registered its fastest growth in nine quarters and the new government led by Prime Minister Narendra Modi has vowed to keep the fiscal deficit under control at 4.1 per cent of GDP.
A strong government, stable currency and signs of faster economic growth are the reasons for the changed outlook, analysts say.
Dr. Shubhada Rao, Senior President & Chief Economist at Yes Bank told NDTV that the revision is a validation of macro stability over the last one year.
“Pre September 2013 was the time, when India was in extreme turbulence, the currency was volatile. Most of these concerns have been addressed and the growth prospects are looking better,” she added.
Standard & Poor’s and Fitch Ratings had lowered their outlook on India to “negative” in 2012, warning the country of a possible rating downgrade to “junk”. However, Fitch had last year returned India’s sovereign outlook to stable.
S&P’s announcement led to a sharp pullback in equity markets and rupee.