New Delhi . If everything goes well, the international rating agency Standard & Poor (S&P) can improve India's rating in the next two years. S&P has given indications of this in a detailed report released on India's economic situation on Wednesday. In a way, S&P has supported the economic policies implemented during the ten-year tenure of PM Narendra Modi. During this period, it has praised the reduction in government expenditure, controlling fiscal deficit and continuing economic reforms and on this basis, the Indian economy has been placed in the positive category which was kept stable till now.

Rating changed from stable to positive after 14 years

Just before the results of the general elections, this report of a leading economic research agency of the world furthers the reports related to India by agencies like the World Bank and the International Monetary Fund. Despite praising the Indian economy and the economic management of the NDA government, S&P has kept India's rating at BBB (-negative) on a long-term level, which is the worst rating in terms of investment. However, after 14 years, the rating outlook has been changed from stable to positive. S&P has said that "if the economic reforms are taken forward along with reducing the increased debt pressure on the government and reducing the interest burden, then India's rating can also be improved in the next 24 months."

The country's rating builds credibility among investors

The rating of any country is its credibility among international investors. The risk or opportunity of investing in a country is estimated based on the rating. A better rating means that the investments made there are safe. All foreign investors make their investment decisions based on this. Not only this, with a better rating, the Indian government can get loans from foreign countries at cheaper rates. In the year 2010, S&P changed India's rating outlook from negative to stable.

S&P's outlook changed on this basis

In its report, S&P said, “Its positive outlook on India is based on the rapid economic growth rate, the government's intention to improve the quality of government expenditure and to control the fiscal deficit.” S&P has projected the combined deficit of the Centre and states to be 7.9 per cent and has expressed hope that it will come down to 6.8 per cent by 2028.

The election results will not affect the reforms

The report said that whatever the result of the general elections in June 2024, the incoming government will continue reforms to accelerate the pace of development, continue investment in the infrastructure sector and maintain fiscal balance. Some economists have also cited the recent transfer of dividend amount of Rs 2.11 lakh crore by RBI to the central government and the continued increase in GST collection as reasons for changing S&P's outlook. It is believed that India's fiscal deficit in the year 2024-25 can be 5.1 percent or even lower.

Further improvement in the rating will also depend on what steps are taken to reduce the debt burden on the central government. Also, how effective the monetary policy of RBI proves to be in controlling inflation. It should be noted that the world's renowned rating agencies are not able to improve India's rating due to the failure to control the fiscal deficit.

Apart from S&P, Fitch and Moody's have also given India the worst rating in terms of investment. In its detailed report in April 2024, Moody's kept India's rating outlook positive but did not change the rating. It also raised questions on India's ability to control fiscal deficit.