S&P maintains negative outlook on India

New Delhi, May 17 (IANS) Global ratings agency Standard & Poor’s (S&P) Friday said its outlook on India remained negative and there was a one-in-three likelihood of a downgrade within the next 12 months.

The agency affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited sovereign credit ratings on India. “The outlook on the long-term rating remains negative,” S&P said in a report released in Singapore.

India’s long-term growth prospects, underpinned by its favorable demographic profile, and its high foreign exchange reserves support the ratings. The country’s large fiscal deficit and debt, as well as its lower middle-income economy, constrain the ratings, S&P said.

The negative outlook signals at least a one-in-three likelihood of a downgrade within the next 12 months.

“We may lower the rating if we conclude that slower government reforms than we currently expect would not lead economic growth to recover to levels experienced earlier this decade,” it said.

“Such a conclusion could come from anemic investment growth, reversals on diesel or other subsidy measures, or inability to increase electricity supply to meet increasing demand. Similarly, if India’s general government fiscal or current account deficits worsen contrary to our expectations, we may lower the ratings,” it added.

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