India’s high growth enough to keep credit rating stable: S&P Global

London (Reuters): 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%, 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% 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% it would be a lot more complicated.”