Centre puts positive spin on S&P rating; Goyal calls it ‘very satisfying’

After Standard & Poor's retained its sovereign rating for India at BBB- with a stable outlook, the government chose to focus on the positives, with railway minister Piyush Goyal calling it a ''very satisfying'' report that endorsed the administration's reforms agenda.

''Moody's have probably viewed measures like bank recapitalisation more favourably. Perhaps S&P did not do the same. So there may be a difference in terms of judgement,'' he said.

Economic affairs secretary Subhash Chandra Garg said S&P had preferred to be cautious and hoped reforms undertaken by the government will reflect in a ratings upgrade next year.

"We are not disappointed but our expectation would be that S&P also takes into account what the government has done," he said, adding that both agencies had taken note of the reforms unveiled by the government. He also reiterated that the government would stick to the fiscal consolidation path.

''This is a year of transition, lot of reforms are being done - structural reforms, fundamental in nature, which have made their impact on growth, on revenues and others. But the commitment of the government to stay on course on fiscal consolidation in the medium term is completely there,'' Garg said.

''Transition may induce some temporary thing but we have to still make that assessment. But the path on the longer, medium term is very clear. The government wants consolidation. Transition is challenging, definitely. But how much, whether it is substantial, whether it's anything meaningful, for that, still the assessment is to be made."

Garg expects a turnaround in the next quarter. "We are going to get the second quarter data in November end. I am very confident, very clear that we will have a reversal of decline. governhave bottomed out. Next quarter assessment would be far better than quarter one... I think economic turnaround is very clear, that is definitely entrenched," he said.

Sanjeev Sanyal, principal economic adviser, called the action ''a bit unfair'' adding that low per capita income is ''neither a reflection on our ability or our willingness to pay debt.''

He also pointed to the similarity in assessment by Moody's. ''They have said about everything which Moody's have said about India's reforms, structural reforms, good growth… they have also the same two concerns which Moody's had about fiscal deficit and India's low per capita growth,'' he said.

Asked why it didn't go for a rating upgrade when Moody's, with almost the same analysis, had done so, Ravi Bhatia, S&P's director for sovereign and international public finance ratings, told The Economic Times, ''The decisions of other rating agencies have no bearing on our own, and there is no reason to expect all rating agencies to have exactly the same views on every rated entity.

''Our stable outlook currently points to the fact that the rating is likely to remain unchanged for the next couple of years.''   In November 2016 as well, S&P had said it had kept India at the lowest investment grade rating of 'BBB-' with a 'stable' outlook, saying, it had decided against an upgrade of India's sovereign rating despite policy reforms and economic stability and instead keep the low `BBB-'  rating at least for the next two years. (See: S&P to keep India's rating at a low BBB- for next 2 years, govt not bothered).

Soumya Kanti Ghosh, group chief economic adviser at State Bank of India, told ET, "An analysis of the foreign currency long term sovereign ratings given by S&P for a group of twenty countries for the period 2005-17 indicates that with India currently being in BBB- rating class there is only a 5 per cent probability of rating upgrade. Hence a rating action was always difficult."

(See:  S&P dashes hopes of upgrade, keeps India at BBB-)