德意志银行-印度宏观经济-20170810-deutschebank-analyzingindia’sratingsupgradeprospects.pdfVIP

Deutsche Bank Research Asia Economics Date India India Economics 10 August 2017 Weekly Analyzing Indias ratings upgrade prospects India and Indonesia were among the “fragile five” economies in 2013, but a Kaushik Das lot has changed since then. In this report, we compare India and Indonesias Chief Economist macro improvement in the past 4-5 years to ascertain whether there is a genuine +91-22-7180 4909 case for India to deserve a ratings upgrade. In order to highlight the comparable improvement achieved by India and Indonesia, we calculate the net change (improvement/deterioration) in key economic parameters for the two countries by taking the difference between the expected outturn in 2017-2018 (as per Deutsche Bank forecasts), versus the average of the actual outturn in 2012-13, a period which was characterized by significant financial market volatility. Based on our analysis, we would argue that there is a genuine case for the rating agencies to consider giving a ratings upgrade to India, or at least prepare the ground (SP and Fitch) by first raising the outlook to positive (from stable), as an acknowledgement of the positive changes that have taken place in India since the 2013 “taper tantrum” period. We recognize that banking sector NPA resolution and fiscal consolidation remain a work-in-progress in Indias case, but realistically each and every emerging market economy will have some areas of weakness at any given point of time. Taking a broader view of the overall macro picture, we think the Indian economy is far more resilient today, with low inflation, high real interest rates, large FX reserves, stable rupee and robust growth outlook. Indeed, today In