S&P Global Ratings has affirmed BB-minus long-term and B short-term issuer credit ratings on the state of Kerala.
The outlook on long-term rating remains stable, reflecting the view that Kerala will continue to benefit from strong access to domestic capital markets and liquidity support from the Indian central bank even as its funding needs remain elevated during the pandemic.
However, S&P said it may lower the ratings if the state fails to gradually consolidate its budget to achieve a projected stabilisation of its debt burden at 240 to 250 per cent of consolidated operating revenues.
But it added that it continues to assess Kerala's financial management as satisfactory. Policymakers are generally in accord on key development issues, as seen in their coordinated response to Covid-19.
Kerala sets and adheres to targets set in its five-year plan with focus on infrastructure development and on improving healthcare and educational standards.
The re-election of incumbent government for a successive term is an unprecedented event in the state's political history.
"We believe this will provide continuity in areas of policy direction such as commitment to deliver quality public services and economic development. It also reflects a favourable public view regarding the handling of the Covid-19 response, progress of vaccination, and overall socio-economic development." S&P said Kerala is ahead of all Indian states in its vaccination rate.