Here is some good news for the NDA Government. The Europe-based ARC Ratings SA (ARC) has assigned India ‘BBB+’ sovereign rating which is a shade better than what has been assigned by the big three global credit ratings agencies.

In its maiden sovereign rating assignment, ARC has assigned ‘BBB+’ (stable outlook) long-term foreign currency issuer rating to India.

It also assigned ‘A-’ (stable outlook) long-term local currency issuer to the country.

Financial commitments According to ARC, an entity rated ‘BBB+’ exhibits an adequate capacity to meet its financial commitments.

However, adverse economic conditions or suddenly changing circumstances are more likely to lead to a weakened capacity to the obligor to meet its financial commitments.

An entity rated “A” has a quite strong capacity to meet its financial commitments but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions when compared to obligors in highest-rated categories.

Other ratings Global credit rating agencies, Standard & Poor’s and Fitch have a ‘BBB-’ (stable outlook) — the lowest investment grade rating — sovereign rating on India. Moody’s too has lowest investment grade rating on the country of “Baa3” (stable outlook).

Among the factors mentioned by ARC for assigning ‘BBB+’ rating include its expectation that India’s growth will accelerate from an annual average of 4.8 per cent in 2012-14 to 6.5 per cent 2015-17.

This will be driven by a recovery in corporate investment, robust domestic consumption and the new government’s aggressive growth-enhancing structural reform programme.

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