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Pace, direction of reforms will fix India's ratings: S&P
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SME Times News Bureau | 16 Apr, 2014
The direction and pace of policy
reforms of the new government that assumes office after the Lok Sabha
polls will determine India's sovereign ratings, international agency
Standard & Poor's (S&P) said Tuesday.
“The direction and
pace of policy reforms, more than which political party takes control,
can affect the ratings on the sovereign,” S&P said in its latest
reports.
According to the reports, the outcome of India's
general elections can provide an insight into the political stability,
ability, and willingness of the new government to implement reforms for
boosting economic growth.
Two reports in which the agency made
the observations are titled "India's Election Is Pivotal For Its
Sovereign Creditworthiness" and "The New Government's Reform Policies
Will Be Critical To The Credit Profile Of Indian Corporates And Banks”.
Standard
& Poor's has a BBB- rating on India with a negative outlook. This
is the lowest investment grade rating. A downgrade will give India's
sovereign ratings a “junk status”.
In its earlier report the
S&P had warned of the risks of a ratings downgrade in the absence of
structural reforms, fiscal consolidation and if economic growth
decelerates further.
"We believe that the current political
landscape in India suggests that no single party could win an outright
majority," said S&P sovereign credit analyst Kim Eng Tan.
“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
new government's policy directions will set the medium-term growth
expectations and long-term structural factors for the economy.
“In
our opinion, structural reforms are essential for India to return to
healthier economic growth of above 6 percent on a sustainable basis and
stimulate investments,” the S&P said.
India's 16th general
elections, where more than 800 million people are eligible to vote, are
underway. To claim the right to form a new government, a single
political party or a coalition of political parties needs to win 272 out
of 543 seats in the Lok Sabha, the lower house of parliament. In the
545-member house, two members are nominated.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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