India's investment and economic growth under the Congress Government have slowed considerably, and its current account deficit has widened, resulting in a weaker medium-term credit outlook.
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.
S&P In its report said,
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.
It reaffirmed BBB-' long-term and 'A-3' short-term sovereign credit ratings on India.
