India’s ratings may be lowered on high deficit: S&P

S&P said that India's ratings may be lowered if fiscal consolidation is delayed further.

Global rating agency Standard and Poor’s said that India’s ratings may be lowered if fiscal consolidation is delayed further,as high fiscal deficits are not sustainable in the medium term.

“India’s high fiscal deficits are not sustainable in the medium term and if fiscal consolidation is delayed,there is a risk that the sovereign credit ratings on India (BBB-/Negative/A-3) may be lowered,” S&P said in a release.

S&P had cut its outlook on India’s long-run sovereign ratings from stable to negative on concerns of high fiscal deficit,which means that ratings are vulnerable to downgrade.

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At present,the agency has assigned BBB negative ratings to India.

If India achieves fiscal consolidation in the next two to three years,the sovereign ratings on India could be maintained at ‘BBB-‘ and the outlook revised to stable,S&P said.

Finance Minister Pranab Mukherjee had said yesterday that he would strive to bring down fiscal deficit from 6.8 per cent projected for the current fiscal to 5.5 per cent next fiscal and 4 per cent during 2011-12.

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