Fitch revises India's outlook to negative
18 Jun 2012
Credit rating agency Fitch Ratings has revised India's outlook to `negative' from `stable' and has kept its long-term foreign- and local-currency issuer default ratings (IDRs) at 'BBB-' and the short-term foreign currency rating at 'F3'.
Fitch also affirmed India's country ceiling at 'BBB-'.
The outlook revision reflects heightened risks that India's medium- to long-term growth potential will gradually deteriorate if further structural reforms are not hastened, including measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments.
The Negative Outlook also reflects India's limited progress on fiscal consolidation and, in particular, on reducing the central government deficit despite improvement in the financial health of state governments, the rating agency said in a release.
"Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy," said Art Woo, director in Fitch's Asia-Pacific sovereign ratings group.
''The rating affirmation reflects India's diversified economy and its high domestic savings, which reduce reliance on foreign investors for private investment and fiscal funding.''
