According to S&P, policies of new government will boost India's economic growth
Standard & Poor (Photo : DC)
MUMBAI: Global rating agency Standard & Poor on Tuesday said that the direction and pace of policy reforms to be pursued by the new government after the Lok Sabha polls would determine India’s credit rating.
“We believe that the current political landscape in India suggests that no single party could win an outright majority. An important factor is how fragmented the government will be. The more parties involved in the next coalition government, the more likely policies will be incoherent and less supportive of credit attributes. The direction and pace of policy reforms, more than which political party takes control, can affect the ratings on the sovereign,” Kim Eng Tan, credit analyst at S&P. Currently, India enjoys investment grade ‘BBB-’ rating with negative outlook.
According to the rating agency, the outcome of India’s general election can provide an insight into the political stability, ability and willingness of the new government to implement reforms for boosting economic growth. “Subsequent policy action could decide if the sovereign rating remains investment grade,” it said. The rating major believes that a decisive mandate can create an environment for speedy resolution of policy bottlenecks and also improve private sector investments.
This can lay the foundations for India’s return to a stronger and healthier growth phase in the medium term. On the contrary, the rating agency said that a fragile centre could delay critical reforms as decision making gets hampered, curbing revival in investment cycle and derailing growth.
( Source : dc correspondent )
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