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Business News/ Politics / News/  S&P may revise India ratings after elections
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S&P may revise India ratings after elections

S&P may revise India ratings after elections

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NUSA DUA, Indonesia: Standard and Poor’s (S&P) may revise its credit rating on India as early as July after the next government outlines its fiscal policy, a senior analyst said on Tuesday.

“Once the new government is in place, we will be talking to them in order to understand their additional fiscal measures and how this would reflect on their budget performance and debt burden both in the short and medium term," Elena Okorotchenko, S&P’s senior director for Asian sovereign ratings, said in an interview.

“Depending on what we learn from this, we may be able to act either by affirming the rating and revising the outlook back to stable or downgrading," she said.

Okorotchenko spoke to Reuters on the sidelines of the Asia Development Bank’s annual meeting, held in Nusa Dua, Indonesia.

India’s month-long general election are due to finish on 13 May and the next government is expected to take office in June.

But market watchers fear the elections could produce a weak coalition government as India grapples with the global economic slowdown and a spate of militant attacks in the past year.

S&P in February changed its outlook on India to negative from stable, indicating it was considering a cut in its rating from BBB-minus, the lowest investment grade rating.

A sovereign rating is an indicator of a country’s financial health and a rating downgrade could raise the interest rates paid by the government and companies when they borrow money.

India’s deteriorating finances and swelling budget deficit have been a growing concern, with the current government sharply increasing borrowing to pay for economic stimulus programmes.

Goldman Sachs expects the total Indian Central and state deficit will rise to 10.3% of the gross domestic product, among the highest in the world, by the end of 2008-09, from 6.3% last year.

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Published: 05 May 2009, 10:46 PM IST
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