- S&P has left India at its lowest investment-grade standing
- Moody's had recently upgraded India's credit rating to "Baa2" from "Baa3
- S&P has long maintained a more cautious approach than Moody's
Moody's Investors Services had a week ago upgraded India's credit rating to "Baa2" from "Baa3", one notch higher than S&P's current rating, citing progress on economic and institutional reforms would lift the country's growth potential.
But in a statement, S&P said it was comfortable with its current rating, which leaves India at its lowest investment-grade standing, despite welcoming recent actions such as the unveiling of the Goods and Services Tax (GST), the country's biggest-ever tax reform.
"Sizable fiscal deficits, a high net general government debt burden, and low per capita income detract from the sovereign's credit profile," S&P said in a statement.
S&P has long maintained a more cautious approach than Moody's, having kept India at the current rating of "BBB-minus", the lowest investment-grade, since 2007.
The agency did change its outlook to "stable" from "negative" in 2014, several months after Prime Minister Narendra Modi was elected with promises of ambitious economic and fiscal reforms, but has not budged even as the government has lobbied rating agencies hard for an upgrade.
In its statement on Friday, S&P said it welcomed government reforms, including the rollout of GST and a planned $32 billion capital infusion into its struggling state-run lenders, while predicting that the economy would "grow robustly" in 2018-2020.
The ratings agency also said India's general government revenue was "low", at an estimated 22 per cent of 2017 GDP, while noting "the large general government debt load and India's overall weak public finances continue to constrain the ratings."
S&P added it would need to see more evidence that government reforms would "markedly improve" the government's finances and reduce its net general government debt to justify an upgrade - reiterating language it had used in affirming India's rating late last year.
Fitch Ratings also currently rates India at "BBB-minus" with a "stable" outlook, in line with S&P's ratings.
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