Standard & Poor upgrades India rating
Standard & Poor, International credit rating agency has upgraded out look of India's BB long-term foreign currency rating to positive from stable. "The outlook revision reflected better prospects for accelerated economic reforms in the near term and positive trends in external flexibility. India's BBB long-term local currency rating and its stable local currency outlook were affirmed" S&P said in a statement.
"The outlook revision reflects positive trends in external flexibility and better prospects for an accelerated pace of economic reforms in the near term," the S&P statement said. "India's external resiliency, as shown by the strengthening of its liquidity position despite a near-doubling of oil prices last year, is likely to improve in the coming years."
The firm said growing export earnings, especially from services, should also be complemented by higher non-debt foreign capital inflows.
As a result, it forecast that the total external debt would decline to around 150 per cent of exports this year compared with over 180 per cent in 1996, and fall further in the coming years.
S&P said the recently accelerated reforms including the first privatisation of a Central Government enterprise, liberalised rules for foreign and private investment in the insurance sector and ongoing steps to remove legal and regulatory barriers should also boost growth prospects.
According to the rating agency, India should continue the reforms to improve, enlarging the role of the private sector. With the combined Central and State Government deficits hovering at around 9 per cent of GDP this year, an upgrade in ratings would depend upon a reduction in the country's large fiscal deficit, S&P said.
Comfortable external liquidity, foreign exchange reserves, which exceed 300 per cent of short-term debt, the recent liberalisation of rules for foreign direct investment, along with the rising number of Indian companies raising equity abroad, these positive impacts resulted that to upgrade the India's rating, said the S&P sources.
Source : MI
Mar 21, 2000 |
