x Abu Dhabi, UAEThursday 27 July 2017

S&P warns of possible downgrade for India

India Dispatch: India still faces a one-in-three chance of its sovereign rating being downgraded in the next two years, the ratings agency Standard & Poor's has warned.

MUMBAI // India still faces a one-in-three chance of its sovereign rating being downgraded in the next two years, the ratings agency Standard & Poor's warned yesterday.

This comes despite the Indian government announcing a host of economic reforms in recent weeks to attract more foreign investment and boost growth.

"A downgrade is likely if the country's economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow," said S&P.

"On the other hand, we may revise the outlook back to stable if the government implements initiatives to reduce structural fiscal deficits, improve its investment climate, and increase growth prospects. Fiscal measures to lower deficits could include a more efficient use of fuel, fertiliser and agricultural subsidies, or the implementation of a goods and service tax."

But the ratings agency pointed out that "after a long wait, the government seems to have reignited reform efforts, and that bodes well for the future development of the country".

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