Global credit rating agencies validate govt's reforms programme: CEA

In an online press briefing, Chief Economic Adviser to the Government, Krishnamurthy Subramanian, pointed out that S&P has projected the growth of 8.5 per cent for next year, based on the structural reforms being carried out by the Centre.

The briefing comes a day after S&P Global Ratings maintained India's sovereign credit ratings, affirming its 'BBB-' long-term and 'A-3' short-term unsolicited foreign and local currency ratings.

Besides, S&P Global Ratings said India's outlook on the long-term rating is stable.

Similarly, Fitch in APAC Sovereign Credit Overview 2Q20 gave an economic growth forecast of 9.5 per cent for 2021-22.

"They particularly mentioned about the push for reforms, the reforms that have been included in the Aatma Nirbhar Bharat package have also been mentioned. Using some of these measures as the backdrop, S&P projects the growth for next year to be 8.5 per cent and this is based on the emphasis on structural reforms that has been done in the package," he said.

"Also, important to keep in mind was that Fitch came up with a report for APAC countries, where they have projected growth for next year to be 9.5 per cent. Both these rating agencies do acknowledge that this year growth will be quite tepid."

Both the agencies predict a contraction of 5 per cent in GDP for 2020-21.

Accordingly, S&P said that India's economy will contract in fiscal 2021, largely owing to the impact of the Covid-19 pandemic.

It forecast a 5 per cent decline in real GDP growth, which would be the worst economic performance in recent history.

According to Subramanian, both the agencies talked about high sustained investments and growth rates without any macroeconomic imbalances because of the structural reforms that have been implemented.

"So overall the rating being maintained and the outlook remaining stable is good news, especially from the perspective of the proposals that were there in the budget this year, for inclusion of the government of India bonds in the sovereign bond indices," he said.

"This clears the path for us to proceed ahead on that move."