Fiscal reforms to have positive effect on India's credit profile: S&P says

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According to media reports, leading international credit rating agency Standard's & Poor (S&P) reckons that the implementation of key fiscal consolidation measures, coupled with structural economic reforms may have a major impact on the credit profile and outlook of Asia's third biggest economy, which has grown below the 5 per cent for the past few quarters.

The rating agency which has maintained a negative outlook on India's BBB minus credit rating, may upgrade its views on the country if significant fiscal reforms are taken by the new government, led by Narendra Modi. A negative outlook indicates the chance of a downgrade in the near-term.

The implementation of fiscal prudence amid measures such as enforcing the goods and services tax would be needed by the new government, S&P said.

A return to power for the more investor and growth friendly BJP government is good news for the economy, and may help boost investment and spring an economic revival as policy uncertainty diminishes.

However, the new government would have its task cut -out as it handles a slowing economy and a rise in inflationary pressures amid structural and supply related bottlenecks, meaning that a significant growth revival is likely to take some time.

Read more about: narendra modi, reforms, credit rating
Story first published: Monday, May 19, 2014, 9:20 [IST]
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