MUMBAI, June 8: Duff & Phelps Credit Rating Company (DCR) of the United States has changed the outlook on the ratings of India to `negative' from "stable". The rating agency has revised its outlook on India on account of the significant fiscal slippage and the potential for balance of payment deterioration in the coming years.India's long-term foreign currency rating is `triple-B-' and the long term local currency rating is `triple-B+'. DCR has said that it remains concerned about a possible downgrade in the near term.The rating agency has said that the 1998-99 budget and its deficit target of 5.6 per cent of GDP, recently released by the BJP-led government, are inconsistent with DCR's previous expectations of gradually narrowing fiscal imbalances, on which India's previously improving credit depended.DCR has said that the decision by the United States to impose economic sanctions on India following its underground nuclear weapons test could also negatively affect India's balance of payments. "Thisdevelopment, in conjunction with negative market perceptions about the new government's foreign investment policies, could result in lower capital inflows in the coming years," it said.DCR has said that it will assess the broad implications of the government's 1998-99 budget in the coming weeks and will also monitor the evolving sanctions situation quite closely. The agency has however noted that India continues to possess a comparitively strong external liquidity position on account of its low short term debt, low current account deficit of approximately one per cent of GDP and a comparitively strong international reserve position.
