Fitch cautions India of downgrade in 12-24 months

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Fitch cautions India of downgrade in 12-24 months
A Fitch analyst said India may face downgrade in the next 12-24 months during a teleconference, Reuters has reported.

"Fitch says the government is likely to miss fiscal deficit target and macroeconomic trends have been disappointing," the report stated.
Fitch along with S&P have been cautioning India over its burgeoning fiscal deficit.

Last month, the rating agency had warned that policy slippage, fiscal loosening in the run-up to 2014 general elections and weak growth could force a downgrade of India's credit rating.

India has been consistently facing problems with its fiscal deficit which is worrisome. The government is unable to control the deficit, as expenditure mounts and subsidies continue to cause a huge burden.

The currency has also been unable to recover, putting pressure on oil imports and hence the fiscal deficit. S&P had also warned India of a ratings downgrade, late last year

"India faces one-in-three chance of rating downgrade in the next two years in case the government fails to push reforms in view of the political gridlock and general election in 2014, " Standard & Poor's had said.

The problems being faced by the economy include soaring fiscal deficit and high inflation, S&P said while retaining India's rating at 'BBB-', lowest in the investment grade. Any further downgrade will push India's rating to the junk status, making it difficult and costlier for Indian entities to borrow funds overseas

Read more about: fitch
Story first published: Tuesday, January 8, 2013, 12:14 [IST]
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