Single assessment different conclution!
Fitch retains BBB- grade, negative outlook for India’s sovereign rating
The negative outlook reflects uncertainty around the medium-term debt trajectory, Fitch said
Fitch Ratings on Tuesday reaffirmed its lowest investment grade (BBB-) sovereign rating for India with negative outlook holding that the country’s rating balances a still-strong medium-term growth outlook and external resilience from solid foreign-reserve buffers, against high public debt, a weak financial sector and some lagging structural issues.
The rating action by Fitch maintaining the negative outlook will disappoint the government since only last month, Moody’s Investors Service had upgraded India’s sovereign credit rating outlook to stable from negative while keeping its credit rating unchanged at Baa3, citing receding risks posed by the financial sector to the overall economy. S&P Global Ratings in July also reiterated its lowest investment grade rating with stable outlook for India.
“The country's rapid economic recovery from the covid-19 pandemic and easing financial sector pressures are narrowing risks to the medium-term growth outlook. However, the negative outlook on the rating reflects lingering uncertainty around the medium-term debt trajectory, particularly given India's limited fiscal headroom relative to rating peers," Fitch said.
The rating agency warned that India could face a rating downgrade if it fails to put the general government debt/GDP ratio on a downward trajectory, for instance, from insufficient fiscal consolidation. A structurally weaker real GDP growth outlook due to continued financial-sector weakness or lacking reform implementation could further weigh on the debt trajectory, it added.
India’s rating could see an upgrade, Fitch said, if implementation of a credible medium-term fiscal strategy to bring post-pandemic general government debt veers towards toward 'BBB' category peers levels; or higher medium-term investment and growth rates without the creation of macroeconomic imbalances, such as from successful structural reform implementation and a healthier financial sector.
The rating agency said fiscal metrics are also showing signs of improvement and it expects the general government deficit to narrow to 10.6% of GDP in FY22, from 13.6% in FY21. “This is consistent with an FY22 central government deficit of 6.9% of GDP, excluding divestment receipts. Per the government's deficit definition, including divestment, this would be 6.6% of GDP, which is slightly below the budget target. Strong revenue growth, particularly from goods and services tax collections, is facilitating the government to stay within its budget parameters, despite modest additional spending pressure from the second pandemic wave," it added.
Fitch projected India’s GDP growth at 8.7% for FY22 and 10% in FY23, to be supported by the resilience of India's economy, which has facilitated a “swift cyclical recovery" from the Delta covid-19 variant wave in the first quarter of FY22. “Mobility indicators have returned to pre-pandemic levels and high-frequency indicators point to strength in the manufacturing sector. The potential remains for a resurgence in coronavirus cases, though we anticipate the economic impact of further outbreaks would be less pronounced than previous surges, particularly given the sustained improvement in the covid-19 vaccination rate, which has now surpassed 1 billion doses administered," it added.
The rating agency said India's strong medium-term growth outlook relative to peers is a key supporting factor for the rating and an important driver of its current baseline of a modestly declining public debt trajectory. “We forecast growth of around 7% between FY24 and FY26, supported by the government's reform agenda and the closing of the negative output resulting from the pandemic shock. The government's production-linked incentive scheme to boost foreign direct investment, labour reform and the creation of a 'bad bank', along with an infrastructure investment drive and the National Monetisation Pipeline, should support the growth outlook if fully implemented. Nevertheless, there are challenges to this outlook, given the uneven nature of the economic recovery and reform implementation risks," it cautioned.
Fitch said it believes immediate financial-sector pressure has eased, in part due to regulatory forbearance measures that are providing banks with time to rebuild capital buffers. “The level of asset quality deterioration from the pandemic, while masked by forbearance relief, also appears less severe than we had anticipated. The recently incorporated National Asset Reconstruction Company (bad bank) could help banks address our expected build-up of impaired loans, while sustaining adequate credit growth, though more details are needed to fully assess its potential. Still, we expect credit growth to remain constrained, averaging at 6.7% yoy over the next several years, unless adequate recapitaliasation can mitigate the risk aversion currently seen among banks," it added.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!
Fitch's rating disappointing but investors see future in India, its reforms
Topics Fitch Ratings | India economy | Credit rating agencies
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
Related News
Most Read
- India's most popular password isn't '123456': it is this word
- Book a loss and exit Paytm stock now, advise analysts
- Sensex ends 372 pts lower; Paytm down 27%; Sapphire gains 4%, Escorts 10%
- Escorts stock zooms 8% as Japan's Kubota to raise stake, make open offer
- Paytm crashes 27% on market debut, wipes out Rs 38K in investor wealth
Markets
- Web ExclusivePaytm Book a loss and exit stock now, advise analysts
- Paytm fails to shine on exchanges; stock debuts at 9% discount at Rs 1,955
- Web ExclusivePost Sapphire's debut, chart check on Burger King, Barbeque, Zomato stocks
- IRCTC shareholding MFs' stake falls below 1%, FPIs sell 2.2% stake in Q2
- Display risk factors prominently in IPO adverts: Sebi to investment bankers
Todays Paper
- RBI working group warns on digital lending by big tech players
- Paytm crashes 27% on market debut, wipes out Rs 38K in investor wealth
- Go Fashion IPO subscribed 6.87 times on second day of subscription
- Hard to decipher one-day market movements: Paytm Group CFO and President
- Market unimpressed with Vedanta's value unlocking plan as group debt weighs
News you can use
- World fashion capitals get a $600 million haircut thanks to Covid-19
- Pandemic distress
- Is compensation paid by employer taxable? The devil is in the detail
- Financial gifting can have roadblocks, especially if the recipient is minor
- Need emergency money? Loan against gold scores over personal loan
- SC rules property transfers done through Power of Attorney won't be valid
Fitch's rating disappointing but investors see future in India, its reforms
Topics Fitch Ratings | India economy | Credit rating agencies
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
Related News
Most Read
- India's most popular password isn't '123456': it is this word
- Book a loss and exit Paytm stock now, advise analysts
- Sensex ends 372 pts lower; Paytm down 27%; Sapphire gains 4%, Escorts 10%
- Escorts stock zooms 8% as Japan's Kubota to raise stake, make open offer
- Paytm crashes 27% on market debut, wipes out Rs 38K in investor wealth
Markets
- Web ExclusivePaytm Book a loss and exit stock now, advise analysts
- Paytm fails to shine on exchanges; stock debuts at 9% discount at Rs 1,955
- Web ExclusivePost Sapphire's debut, chart check on Burger King, Barbeque, Zomato stocks
- IRCTC shareholding MFs' stake falls below 1%, FPIs sell 2.2% stake in Q2
- Display risk factors prominently in IPO adverts: Sebi to investment bankers
Todays Paper
- RBI working group warns on digital lending by big tech players
- Paytm crashes 27% on market debut, wipes out Rs 38K in investor wealth
- Go Fashion IPO subscribed 6.87 times on second day of subscription
- Hard to decipher one-day market movements: Paytm Group CFO and President
- Market unimpressed with Vedanta's value unlocking plan as group debt weighs
News you can use
- World fashion capitals get a $600 million haircut thanks to Covid-19
- Pandemic distress
- Is compensation paid by employer taxable? The devil is in the detail
- Financial gifting can have roadblocks, especially if the recipient is minor
- Need emergency money? Loan against gold scores over personal loan
- SC rules property transfers done through Power of Attorney won't be valid
Indian Economy Fitch Ratings: ফিচ রেটিংসেও স্বীকৃতি, করোনা ধাক্কা সামলে মোদি সরকারের নেতৃত্বে তীব্র গতিতে এগোচ্ছে দেশের অর্থনীতি!
Indian Economy Fitch Ratings: ফিচ রেটিংস জানিয়েছে যে ফিনান্সিয়াল সিস্টেমের ওপরে চাপ কম হওয়ার ফলে গ্রোথ আউটলুকের সঙ্গে জড়িত ঝুঁকি কিছুটা কমেছে।
২০২২-২৩ আর্থিক বর্ষের জিডিপি (GDP) গ্রোথ ফিচ রেটিংস জানিয়েছে যে ফিনান্সিয়াল সিস্টেমের ওপরে চাপ কম হওয়ার ফলে গ্রোথ আউটলুকের সঙ্গে জড়িত ঝুঁকি কিছুটা কমেছে। ফিচ মনে করছে যে ২০২১-২২ আর্থিক বর্ষে ভারতের জিডিপি গ্রোথ প্রায় ৮.৭ শতাংশ হওয়ার সম্ভাবনা রয়েছে।
তেজ গতিতে এগিয়ে চলেছে ভারতের অর্থব্যবস্থা। গ্লোবাল এজেন্সি ফিচ রেটিংস (Fitch Ratings) জানিয়েছে যে ভারতের অর্থব্যবস্থা খুবই তেজ গতিতে এগিয়ে চলেছে। ফিচ রেটিংস নেগেটিভ আউটলুকের সঙ্গে লম্বা সময় ধরে ভারতের রেটিং ট্রিপল-বি নেগেটিভ (BBB-) বজায় রেখেছে। ফিচ জানিয়েছে যে এই বছরের মাঝামাঝি সময় থেকে ভারতের গ্রোথ আউটলুক মজবুত হতে শুরু করেছে। করোনা মহামারীর প্রকোপ কিছুটা কম হওয়ার পরেই ভারতের অর্থব্যবস্থা খুবই তেজ গতিতে এগিয়ে চলেছে।
এর সঙ্গেই গ্লোবাল রেটিং সংস্থা ফিচ জানিয়েছে যে ২০২২-২৩ আর্থিক বর্ষে ভারতের জিডিপি গ্রোথ প্রায় ১০ শতাংশ হওয়ার সম্ভাবনা রয়েছে। ফিচ রেটিংস জানিয়েছে যে ভারতের এই রেটিং স্তর মজবুত বৃদ্ধির সম্ভাবনা, বিদেশি মুদ্রার আমদানি, ফিনান্সিয়াল সেক্টর ইত্যাদি বিষয়ের ওপর নজর রেখে করা হয়েছে।
ভারতকে দেওয়া রেটিংয়ের অর্থ গ্লোবাল এজেন্সি ফিচ রেটিংস জানিয়েছেন যে ভারতের নেগেটিভ আউটলুক সরকারের দেনা নিয়ে লম্বা সময় ধরে অনিশ্চিত পরিস্থিতির মধ্যে অবস্থান করেছিল। করোনা মহামারীর জন্য তৈরি হয়েছে এই ধরনের অনিশ্চিত পরিস্থিতি। কিন্তু ভারতে এখন করোনা মহামারীর প্রকোপ কিছুটা কম হওয়ায় ধীরে ধীরে দূর হচ্ছে এই ধরনের অনিশ্চয়তা। এর ফলে ভারতের অর্থব্যবস্থায় এর প্রভাব আগের থেকে কিছুটা হলেও কম হবে। যা ভারতের অর্থব্যবস্থাকে এগিয়ে নিয়ে যেতে সাহায্য করবে।
বৃদ্ধির মাত্রা গ্লোবাল এজেন্সি ফিচ রেটিংস ২০২১ সালের অক্টোবর মাসে ভারতের জিডিপি গ্রোথের অনুমান ১০ শতাংশ থেকে ৮.৭ শতাংশ করেছিল। পরের আর্থিক বছরের জন্য অনুমান করা হয়েছে যে, ভারতের জিডিপি গ্রোথ ১০ শতাংশ হতে পারে। গ্লোবাল এজেন্সি ফিচ রেটিংস বিভিন্ন ধরনের সমীক্ষা চালিয়ে লক্ষ করেছে যে, ভারতের অর্থব্যবস্থার চাকা ধীরে ধীরে এগোতে শুরু করেছে।
করোনার মহামারীর প্রকোপে থমকে ছিল ভারতের অর্থনীতি। এর পর ভারতে করোনার প্রকোপ কম হওয়ার সঙ্গে সঙ্গে ধীরে ধীরে রিকভারি করতে শুরু করেছে ভারতের অর্থনীতি। ভারতের অর্থনীতি যে ভাবে এগিয়ে চলেছে সেই ধারা বজায় রাখতে পারলে, ভারতের অর্থব্যবস্থা পৌঁছে যাবে এক নতুন উচ্চতায়।
Comments