Global ratings agency Standard and Poor’s on Thursday affirmed India’s sovereign rating at ‘BBB-’ with stable outlook, saying the country’s GDP growth is likely to gradually recover towards longer-term trend rates over the next two to three years.

‘BBB’ rating refers to adequate capacity of the rated entity to meet its financial commitments.

“Despite a notable deceleration in India’s economy in recent quarters, we believe its structural growth outperformance remains intact. Real GDP growth is therefore likely to gradually recover toward longer-term trend rates over the next two to three years,” S&P said in a statement.

It expects the economic growth rate to improve to 6 per cent during 2020-21, 7 per cent in the next fiscal and 7.4 per cent thereafter. “We expect India’s economy to continue to outperform peers at a similar level of income, despite a recent slowdown in real GDP growth.

“Supportive monetary, fiscal, and cyclical factors should support economic recovery, with real GDP growth averaging 7.1 per cent in fiscals 2020-2024,” it said.

The agency, however pointed out that India’s fiscal position remains precarious, with elevated fiscal deficits and net government indebtedness.

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