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S&P affirms India's sovereign ratings to 'BBB-'
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SME Times News Bureau | 25 Sep, 2020
Global ratings agency S&P affirmed India's unsolicited foreign and
local currency sovereign ratings with a stable long-term outlook.
Consequently,
the ratings were affirmed the 'BBB-' long-term and 'A-3' short -term
unsolicited foreign and local currency sovereign ratings.
"India's
worsening Covid-19 situation, along with strict measures aimed at
containing spread of the pandemic, have hit the economy hard. Productive
capacity has been severely disrupted since the start of the pandemic.
We foresee a permanent loss of approximately 13 per cent of output
compared with India's pre-pandemic trend," the ratings agency said in a
statement.
"While India's economy continues to outperform peers
at a similar level of income on a 10-year weighted average real GDP per
capita basis, its performance on this metric has weakened somewhat."
As per the agency, prior to the onset of the Covid-19 pandemic, the Indian economy had already slowed measurably.
"Existing
vulnerabilities, including a weakened financial sector, rigid labour
markets, and weak private investment, could hamper the economic
recovery, especially in view of the deeper downturn this year than we
expected," the statement said.
"Although India's banking sector
has ample liquidity, lending conditions remain tight, with limited risk
appetite. Credit extension to less creditworthy borrowers in the
non-bank financial institution (NBFI) space may be weak for some time
owing to heightened prudence in banks' lending standards."
According
to the statement, government measures aimed at backstopping NBFI debt
should help alleviate these conditions to some extent.
"Liquidity
risks are more prevalent in some parts of the NBFI sector, especially
for firms in the automobile, small and midsize enterprise (SME), and
microfinance segments," the statement said.
In terms of outlook,
the agency expects India's economic activity to begin to normalise in
fiscal 2022, resulting in real GDP growth of about 10 per cent.
"A
significant proportion of this rebound will be due to the very weak
base in the current fiscal year. The Indian economy's long-term
outperformance highlights its historical resilience," the agency said.
"The
country's wide range of structural trends, including healthy
demographics and competitive unit labour costs, work in its favour.
These strengths will be challenged by the spread of the pandemic,
financial and corporate weakness, and a prolonged decline in
investments."
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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
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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