International rating agency Standard & Poor's ruled out on Wednesday any upgrade in India's sovereign rating through 2017 despite policy stability and reforms, triggering a strong reaction from the government which asked the US-based agency to introspect as there was a disconnect between its thinking and investors' perception.
S&P Global Ratings maintained the lowest investment grade rating of 'BBB-minus' with a 'stable' outlook for India saying it wants to see more efforts to lower government debt to below 60% of GDP and that it did not expect revenues to rise enough to meaningfully lower the deficit over the medium term.
"The stable outlook balances India's sound external position and inclusive policy making tradition against the vulnerabilities stemming from its low per capita income and weak public finances," S&P said in a statement.
The outlook, it said, "indicates that we do not expect to change our rating on India this year or next, based on our current set of forecasts".
Like S&P, Fitch Ratings also rates India at 'BBB-minus', the lowest investment-grade, with a 'stable' outlook.
Moody's Investors Service rates India at an equivalent 'Baa3', but with a "positive" outlook.
The status quo in the rating triggered an angry reaction from the government with economic affairs secretary Shaktikanta Das saying that upgrade did not come despite the fact that reforms undertaken by India unparalleled any major economy anywhere in the world and that calls for 'introspection' on part of the rating agencies.
Stating that there was a "disconnect" between what the rating agencies think and investor perception of India, he said the government would continue to take measures to strengthen the economy, boost GDP growth rate and create jobs. "If the rating has not been improved, it's a matter which doesn't bother us so much. It's a question which calls for an introspection among those who do the rating," Das said. In
September, another global rating agency Moody's had termed India's reforms slow with muted private investment and NPAs a challenge, and had said it could upgrade India's rating in 1-2 years if it is convinced that reforms are "tangible". Das said global investors feel India is highly "under-rated".