Wednesday, April 25, 2012

India's Growth Story Dims on S&P Downgrade

Standard & Poor’s announced that it has revised its outlook on India’s long-term rating—which had been stable—to negative. According to S&P, there’s a one-in-three chance of a downgrade to India’s BBB- sovereign credit rating. The threats to India’s rating include a weakening global economy, falling growth prospects for Indian gross domestic product, and political paralysis threatening fiscal reforms. At the same time, S&P revised its outlook to negative for seven “government-related entities,” including the Export-Import Bank of India, the India Infrastructure Finance Co., the Indian Railway Finance Corp., and the Power Finance Corp.

S&P sees India’s economy growing just 5.3 percent in the new fiscal year, which runs from April to March, down from the 6 percent the country has averaged over the past five years and well below the 8 percent it enjoyed before the global financial crisis.

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