Despite the recent initiatives taken by the government to accelerate the reform process and prop up the snail paced economic growth, global rating agency Standard & Poor (S&P) has retained its negative outlook and affirmed its sovereign credit rating of ‘BBB-/A-3’ on India. However, in a blow, the rating agency has warned of a likely downgrade in 2014 if the new government fails to reverse India's low growth. It underscored that the current investment-grade ratings are supported by institutional strengths and foreign exchange reserves.
The rating agency had earlier in August this year had reiterated its negative outlook on India, citing concerns over India's fiscal and current account deficits. Further, these ratings just reaffirm the same negative outlook on India.
However, it remains to be highlighted that ever since the rating agency affirmed its negative outlook for India in August, both government and Reserve Bank of India took slew of measures to improve the macro-economic condition, which also resulted in a swift recovery in the Indian currency. Further, Finance Minister P Chidambaram in the last week also pointed over green shoots of Indian economy, i.e, good monsoon, rising exports, strong core sector growth and a lower-than-expected current account deficit, which were termed as good auguries for an economic revival.
