Why has Standard & Poor retained India’s sovereign rate at the same level?

S&P has opted to retain India’s long term foreign and local currency rating at the lowest possible investment grade considering that the Indian economy could experience record contraction in FY21 due to the global pandemic. It was a ratings affirmation.

One good point for India is that the stable outlook has been retained and S&P has also projected Indian GDP to grow sharply in FY22 and FY23. S&P observed that direct fiscal support in India was limited to 1.2% of GDP compared to 3% for EM economies.

S&P raised a major concern that fiscal deficit could rise to above 12.5% of GDP due to much weaker revenue generation on direct and indirect taxes. Meanwhile, the government's net indebtedness is set to exceed 90% of GDP this year.