Economic boost

A decade after upping India’s economic outlook from ‘negative’ to ‘stable’, S&P Global Ratings has raised it to ‘positive’ on the back of ‘robust economic growth, pronounced improvement in the quality of government spending and political commitment to fiscal consolidation’. This implies that India’s creditworthiness — a key factor for investors — has improved. The rating upgrade has come on the eve of the final phase of the Lok Sabha polls. No wonder the Union Government has welcomed the revision in outlook, saying that it reflects a solid growth performance and good prospects for the coming years, even as S&P expects continuity in economic reforms and fiscal policies — irrespective of the outcome of the General Election.

The S&P has put its stamp on the remarkable recovery made by the Indian economy after the mayhem caused by the Covid-19 pandemic. It has forecast India’s GDP growth at 6.8 per cent this fiscal. This is an encouraging sign amid a global slowdown. Going a step ahead, the Reserve Bank of India (RBI) has estimated that the GDP growth is likely to touch 7 per cent in 2024-25. It was only last week that the RBI transferred a record Rs 2.1 lakh crore dividend to the government. The funds might be used to reduce the fiscal deficit, which the government hopes to bring down significantly over the next two years.

The stock market, however, was not impressed by the latest S&P rating, with Nifty and the BSE Sensex falling appreciably on Thursday. This downturn is being attributed to growing nervousness among investors ahead of the election verdict. Indian stock indices had a superb bull run last week, defying the slump in global markets. But the reversal suggests that a churn in the market sentiment is manifesting as the counting day nears. Could it be that a thumping victory for the BJP-led alliance is no longer a foregone conclusion?