S&P may downgrade the credit rating of India to non-investment grade

S&PThe Credit Rating agency Standard and Poor’s (S&P) announced that it may downgrade India below investment grade, if the next government of the Asian country does not present a credible plan for dealing with low economic growth. The S&P said that in order to correct the assessment of India to “stable”, the new government should prepare a program to restore growth, improve public finances and to implement an effective monetary policy. S&P is only one of the three major agencies that puts “negative” outlook for India. The country’s rating is BBB-, or the lowest possible investment grade. The credit agency also said it will make the next revision of the rating after the Indian parliamentary elections are scheduled for May 2014, unless fiscal and external situation of the country does not deteriorate significantly.
“The negative outlook means that we can downgrade to speculative grade next year, if the government, which took office after the election, not done enough to change the low economic growth in India”, says the official position of the S&P.
The Indian economy continues to face serious difficulties after growth has slowed to a low of decades of under 5 % in the year ended in March fiscal year. Analysts attributed the decline to a lack of decisive government action, and high interest rates.
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