New Delhi: With fiscal consolidation deteriorating, rating agency Standard & Poor’s today said it would monitor fiscal deficit among other factors to review India’s sovereign ratings, which currently stands at the lowest investment grade.
“The large size of fiscal deficits and resulting debt outstanding are two of the most significant negative factors on our sovereign ratings in India,” S&P director for Sovereign and IPF ratings T K Ogawa said in an e-mail statement.
Ogawa said: “We will monitor carefully on the future trajectory of fiscal deficits for both central and local governments, macro economic growth rate in the medium term, inflation and interest rates, which could affect the cost of funding etc.”
S&P’s current ratings for both India’s overseas and domestic credit is at lowest investment grade.
In his interim Budget, finance minister Pranab Mukherjee revised the Centre’s fiscal deficit to 6% of GDP for the current fiscal against earlier projection of 2.5%.
In fact, the revised fiscal deficit is double of what is mandated to the Centre by a fiscal consolidation law.