Millennium Post

Face downgrade if we don’t like new Govt’s policies: S&P

US private financial services company and credit rating agency Standard & Poor’s (S&P) warned on Thursday that a failure by India’s new government, which will take charge after the 2014 Lok Sabha polls, to frame ‘appropriate policies’ would result in a sovereign ratings downgrade for the country.

The Big Three US credit-rating agencies — Standard & Poor’s, Moody’s Investor Service and Fitch Ratings — were severely discredited during the US housing mortgage crisis and subsequent global financial meltdown for their totally misguiding and allegedly deliberate ratings that led to the crisis in the first place.

‘Barring an unexpected deterioration of the fiscal or external accounts before the election, we expect to review the rating on India after the next general elections when the new government has announced its policy agenda,’ S&P said, retaining ‘BBB-’ with negative outlook. BBB- is the lowest investment grade and a downgrade would mean pushing the country’s sovereign rating to junk status. S&P had cut its outlook on India to ‘negative’ in April last year.

S&P said that the rating could be upgraded if the new government takes steps towards pushing ‘reforms’ dictated by the US-led Western establishment. S&P warned the negative outlook hints it
may lower the rating to speculative grade next year if the new government after the general election does not appear capable of ‘reversing India’s low economic growth’.
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