A week after Moody’s upgraded India’s credit rating and praised the reforms taken by Narendra Modi government, now S&P has backed BJP-led National Democratic Alliance (NDA) coalition to dominate the electoral scene. In its report, S&P said that the ruling party continues to consolidate its power at the state level and, despite obstacles to the implementation of reform, strong growth is likely to continue. “Narendra Modi’s coalition, led by the Bharatiya Janata Party (BJP), has further consolidated power in state-level elections in 2017 and we expect it to make further gains. The ruling BJP-led National Democratic Alliance (NDA) coalition dominates the electoral scene, and has a clear majority in the Lok Sabha (the Lower House of parliament, which is directly elected by the people),” it said.
Currently, NDA doesn’t have a majority in the Upper House which is largely elected by state assemblies under India’s federal system. However, S&P has backed it to make further gains and achieve it. “In the Upper House, the opposition has been able to stall some reform efforts. The NDA has been doing well in 2017’s state-level elections and is forecast to make further gains at this level, which could eventually lead to a majority in the Upper House,” it added.
Standard & Poor’s also retained its BBB- rating with a stable outlook. The decision was taken citing country’s low GDP per capita and weak public finances. It also pointed out at certain parameters that should be improved to put upward pressure on the ratings.
Just like Moody’s, it appreciated the reforms taken by Narendra Modi government in last few years, including the implementation of GST. “The government’s proposed capital infusions step will help to address the banks’ bloated balance sheets, which are partly constraining the economy,” said S&P Global Rating credit analyst Amit Pandey.
Last week after upgrading India’s rating after a gap of nearly 14 years, Moody’s had said that implementation of GST, MPC, steps to address NPAs, demonetisation, DBT and Aadhaar are some of the key reforms taken by Narendra Modi government that have worked in India’s favour. It also said that the reforms being pushed through by Modi government will help stabilize rising levels of debt.