S&P maintains India rating on policy stability, infrastructure push

Global ratings agency S&P on Thursday affirmed India’s sovereign ratings at “BBB/A-2” with a “stable” outlook, citing continued policy stability and high infrastructure investment that supports the country’s long-term growth prospects.

The affirmation comes despite risks from higher energy prices, which could strain India’s external balances and inflation outlook given its heavy reliance on imported crude oil.

S&P estimates India’s real GDP growth to ease slightly to 6.6% this year, a pace it said remains strong compared with most emerging-market peers amid a broad global slowdown.

But the agency kept the sovereign at the second-lowest investment-grade rung, flagging concerns over weak fiscal performance, heavy debt burden and low GDP per capita.

India’s economic growth likely slowed to 7.1% in the April-June quarter from a year earlier, according to a Reuters poll of economists, reflecting softer private investment, partly offset by resilient consumer spending and government expenditure.

Earlier this month, Fitch also affirmed India’s rating at “BBB-”, citing robust growth balanced against still-weak fiscal metrics.