India`s rapid economic growth will be enough to offset worries about the independence of its central bank and keep its credit rating in the coveted investment grade bracket, S&P Global said on Wednesday.
India`s BBB- rating puts it on the bottom rung of the investment grade ladder, and sentiment towards the country was hit on Monday when central bank governor Urjit Patel resigned following a months-long tussle over policy with the government.
"We always like to see a central bank that is independent because if you don`t, it can have very negative consequences on your capacity to contain inflation and foster growth," S&P`s lead global sovereign analyst Roberto Sifon-Arevalo told Reuters.
"But when you are growing at 7 percent, that environment is quite forgiving, because it allows for a lot of these unorthodox things to happen without having a tremendous amount of damage."
There are other pressures mounting too though.
Prime Minister Narendra Modi`s support has taken a hit ahead of national elections next year, volatile crude prices are tough for a country that imports over 90 percent of its oil, and there is general pressure on emerging markets amid a rumbling global trade war.
"At the moment that (the high growth) is enough (to keep the rating stable)," Sifon-Arevalo added. "If the economy was growing at 2 percent it would be a lot more complicated."
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