S&P's cuts India's rating from stable to negative

[kewell333]

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The following statement was released by the rating agency:

India's investment and economic growth have slowed, and its current account deficit has widened, resulting in a weaker medium-term credit outlook. -- Standard & Poor's expects the government to face headwind in implementing policy measures to improve its fiscal and macroeconomic parameters in the near future, given the current unfavorable political environment. -- We are revising the outlook on the long-term ratings on India to negative to reflect at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow. -- We are affirming our 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India.

April 25 -- Standard & Poor's Ratings Services today affirmed the 'BBB-' long-term and 'A-3' short-term unsolicited sovereign credit ratings on India. Standard & Poor's also revised the outlook on the long-term rating to negative from stable. The transfer and convertibility assessment for India is unchanged at 'BBB+'.

"The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting," said Standard & Poor's credit analyst Takahira Ogawa.

India's external position remains resilient despite the deterioration in the past two years. The country's foreign currency reserves cover about six months of current account payments, down from eight months in 2008 and 2009.

Similarly, the country's net external liability position has risen to about 50% of current account receipts, but more than half is related to foreign direct investment and portfolio equity flows, which are less problematic than debt in most scenarios. Currency flexibility also offers a buffer against volatile external flows.

High fiscal deficits and a heavy debt burden remain the most significant constraints on the sovereign ratings on India. We expect only modest progress in fiscal and public sector reforms, given the political cycle--with the next elections to be held by May 2014--and the current political gridlock. Such reforms include reducing fuel and fertilizer subsidies, introducing a nationwide goods and services tax, and easing of restrictions on foreign ownership of various sectors such as banking, insurance, and retail sectors.

The negative outlook signals at least a one-in-three likelihood of the downgrade of India's sovereign ratings within the next 24 months. A downgrade is likely if the country's economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow, Mr. Ogawa said.

On the other hand, the ratings could stabilize again if the government implements initiatives to reduce structural fiscal deficits and to improve its investment climate. Fiscal measures could include an increase in domestic prices and a more efficient use of fuel and fertilizer subsidies, or an early


TEXT: S&P cuts India outlook to negative from stable - Yahoo! News India

[kewell333]

NEW DELHI: Ratings agency Standard & Poor's on Wednesday cut India's outlook to negative from stable, citing slow progress on its fiscal situation, as well as deteriorating economic indicators. Stating that India's investment and economic growth have slowed, Standard & Poor's (S&P) revised its outlook for the Indian economy to negative and gave it a rating of BBB(-) from stable.

The lowered outlook jeopardises India's long-term rating of BBB-, which is the lowest investment grade rating. S&P has threatened to downgrade India's rating in next 2 years if the fiscal situation does not improve.

"The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting," S&P credit analyst Takahira Ogawa said in a note.

S&P said that India's target of cutting deficit to 3.9% is beyond reach as it has widened. The government recently projected a fiscal deficit of 5.1% of GDP for 2012-13.

S&P is of the opinion that the Indian government will face headwinds in implementing key policy measures. The rating agency sees a weaker medium term credit outlook for the economy. S&P also expects the real per capita GDP to be at 5.3% in FY13.

According to S&P only a modest progress in fiscal reforms is foreseeable and that policy reversal by the government may diminish FII confidence.

According to ET Now, Finance Ministry sources are of the opinion that the rating outlook change was not unanticipated and the good thing is that India's rating has not been downgraded.

The sources said that the outlook revision will not impact capital inflows and India continues to remain an attractive investment destination. The sources added that it will not impact India Inc's overseas borrowings ability.

India's 10-year bond yield rose 4 basis points to 8.63 per cent, while the rupee weakened to 52.64 against the dollar from 52.48 before the action. Stocks were also hit, with the main BSE index down 0.9 per cent.

India's fiscal deficit swelled to an expected 5.9 per cent of GDP in the fiscal year that ended in March, far above the government's 4.6 per cent target.

Moody's has a Baa3 rating on India, while Fitch rates India BBB-. Both are also the minimum investment grade ratings. Moody's in December issued a stable outlook for India.

Shankar Sharma of First Global said that he did not pay much attention to grades by rating agencies. He also felt that the outlook change would not affect the Indian markets beyond a few days.

S&P said that government's policy reversals may diminish FII confidence.

Commenting on the outlook change, Adrian Mowat of JP Morgan told ET Now that he was not surprised. He opines that the biggest headwind for the Indian markets is the government's policy framework.

S&P lowers India's outlook to negative, threatens downgrade - The Economic Times

[northeast]

because indian government keep publishing wrong or fake economic data.

[Mo12]

threads about india economy is not allowed here

[shuttler]

threads about india economy is not allowed here

No. Let it run!

india is the up and coming super duper power. it is an avid bootlicker of usa. it is a nuke power and the giant "China killer".

Despite:

it has 2 million kids dying of hunger each year + it tops the world in open d*f*c*t**n + the largest illiteracy + the largest no of slums and dirt poor people + amongst the largest no of hiv / aids patients in the world + rat temples + cruel female "circumcision" + burning women and torture + gendercide + Kashmir and massive rebellious movements ..."

My great admiration when they still say "proud to be indian"!

[Rusty]

threads about india economy is not allowed here

No Indians seem to complain when the thread is about good economic forecast of India.
But when something negative comes up, all of a sudden the topic is banned?
there is a word for this kind of behavior

[Raphael]

threads about india economy is not allowed here

I honestly don't know why this policy is in place. The Indian economy is not like the absence of toilets in India - it's not inherently offensive and humiliating.

Articles about India's economy, that are recent, that are from reputable sources, and in which the OP has not sensationalized the topic title or added inflammatory commentary should absolutely be permitted.

[Contract Killer]

No. Let it run!

india is the up and coming super duper power. it is an avid bootlicker of usa. it is a nuke power and the giant "China killer".

Despite:

it has 2 million kids dying of hunger each year + it tops the world in open d*f*c*t**n + the largest illiteracy + the largest no of slums and dirt poor people + amongst the largest no of hiv / aids patients in the world + rat temples + cruel female "circumcision" + burning women and torture + gendercide + Kashmir and massive rebellious movements ..."

My great admiration when they still say "proud to be indian"!

Our Injuries are open for all to see. Not like someone else.......... who has hidden a rotten & decaying elephant below a blanket.

[anathema]

Good Job S&P....About time the moronic government is put into action....Seriously these guys have been sleeping !

[Adnan Faruqi]

Its purely a blackmailing tactics of racist EU/US

They want reform and to allow foreign US/EU companies in retail etc.

When we are not doing they are doing this.

They are using WB/IMF/WTO/WHO/UN/rating agencies for the benefit of west

For controlling the world as per their wishes

Why haven't they cut USA's rating when it was having recession ??????? while we have a fantastic growth that year.

[Syama Ayas]

Even though this thread is about a banned topic let me educate you.

No. Let it run!

The mods decide that, go tell them

india is the up and coming super duper power.

If you believe so, ok

it is an avid bootlicker of usa.

Not being submissive to china doesn't mean a nation becomes an avid bootlicker of usa

it is a nuke power and

Yes! India has nuke power

the giant "China killer".

If you feel so, ok

Despite:

it has 2 million kids dying of hunger each year

I wonder where this nonsense comes from, unless one has perverted Indophobic fetish to picture Indian children dying of starvation.

The child mortality report of 2011 shows, the entire child deaths in India is 1.696 million and reasons varying from neo-natal diseases.

Child Mortality 2011

+ it tops the world in open d*f*c*t**n

Open defecation is a culturally issue as many rural Indians are farmers.

+ the largest illiteracy

India is also the place where large (probably largest maybe) number of people have become literate in last decade.

+ the largest no of slums and dirt poor people

This might come as a horrible shock to you but as of 2010, China has more of its citizens in slums than India.

URBAN TRENDS: CHINA, INDIA IN GIANT STRIDES TO IMPROVE SLUMS

Proportionally, China’s urban population living in slums fell from 37.3% in 2000 to some 28.2% in 2010, a relative decrease of 25%.

India has lifted 59.7 million people out of slum conditions since 2000. Slum prevalence fell from 41.5% in 1990to 28.1% in 2010. This is a relative decrease of 32%.

India Urban population is 28% China it is approx 50%, so figure.

+ amongst the largest no of hiv / aids patients in the world

We also made the largest drop in HIV numbers

Sharp drop' in India Aids levels

+ rat temples

We have one temple where rats are considered holy, you know singular, plural?

+ cruel female "circumcision"

If i recall it was one sect which followed.

+ burning women and torture

Is immolation of women or torture specific to India?

+ gendercide

I recall the skewed sex ratio and preference for male child existed in China too

+ Kashmir and massive rebellious movements ..."

You have your problems in Tibet and Xinjiang, we have ours

My great admiration when they still say "proud to be indian"!

Thank you!

[Lyrical Mockery]

way to go Syama. the troll would be back with more nonsensical posts though.

[kewell333]

Global agency Standard and Poor's on Wednesday lowered India's rating outlook to negative and warned of a downgrade in two years if there is no improvement in the fiscal situation and the political climate continues to worsen.

The lowering of outlook from stable (BBB+) to negative (BBB-) is expected to make external commercial borrowings expensive for Indian Inc.

It may also have implications for the capital market.

"The outlook revision reflects our view of at least a one-in-three likelihood of a downgrade if the external position continues to deteriorate, growth prospects diminish or progress on fiscal reforms remains slow in a weakened political setting" said S & P's credit analyst Takahira Ogawa in a statement.

Terming S&Poor's decision to lower India's credit rating outlook to negative as a 'timely warning', Finance Minister Pranab Mukherjee, however, said there is no need to panic as the government is committed to economic reforms.

"I am concerned but I don't feel panicky because I am confident that our economy will grow at 7 per cent, around 7 per cent if not plus.

"We will be able to control fiscal deficit and it will be around 5.1 per cent", he told reporters.

BBB- is the lowest investment grade rating.
Commenting on the rating action, Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities, said, "Indian (new) sovereign rating is just one step away from junk bond status. . . Somehow I feel the dream of India growth story is coming to an end".

The negative outlook, the rating agency further said, signals likelihood of the downgrade of India's sovereign within the next 24 months.



S&P cuts India's outlook from stable to negative - Rediff.com Business

[A1Kaid]

This will likely hurt India's credit rating. It was rated as a BBB-, it will likely decline now. This is a significant economic setback.

The Indian growth story took another hit today. Standard & Poor’s announced it was revising the 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 GDP and political paralysis threatening fiscal reforms. At the same time, S&P revised 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 cited what it called “an extremely high likelihood of extraordinary government support” to these PFCs, hence ratings at the same level as the rating on India. S&P also downgraded to negative the outlook for the three top IT companies in the country, Infosys (INFY), Tata Consultancy Services, and Wipro (WIT).

India's Growth Story Dims on S&P Downgrade - Businessweek

[shuttler]

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Even though this thread is about a banned topic let me educate you.

The mods decide that, go tell them

If you believe so, ok
Not being submissive to china doesn't mean a nation becomes an avid bootlicker of usa
Yes! India has nuke power
If you feel so, ok
Despite:
I wonder where this nonsense comes from, unless one has perverted Indophobic fetish to picture Indian children dying of starvation.
The child mortality report of 2011 shows, the entire child deaths in India is 1.696 million and reasons varying from neo-natal diseases.
Child Mortality 2011
Open defecation is a culturally issue as many rural Indians are farmers.
India is also the place where large (probably largest maybe) number of people have become literate in last decade.

This might come as a horrible shock to you but as of 2010, China has more of its citizens in slums than India.

URBAN TRENDS: CHINA, INDIA IN GIANT STRIDES TO IMPROVE SLUMS
India Urban population is 28% China it is approx 50%, so figure.
We also made the largest drop in HIV numbers
Sharp drop' in India Aids levels
We have one temple where rats are considered holy, you know singular, plural?
If i recall it was one sect which followed.
Is immolation of women or torture specific to India?
I recall the skewed sex ratio and preference for male child existed in China too
You have your problems in Tibet and Xinjiang, we have ours
Thank you!

The current fiscal deficit to gdp in india is 2 times of the standard permissible in the Eurozone!

thank you for your show of massive dirt shoving under the rug! the infant mortality rates, open defecation ... are all substanitated by indian media and international reports. are you one of the Kumbh Mela "pilgrims"?