Fitch renews warning on India's outlook
TOKYO/MUMBAI (Reuters) - Fitch Ratings reiterated on Tuesday its "negative" outlook on India's sovereign credit rating, citing concerns about slowing economic growth, persistent inflationary pressures and an uncertain fiscal outlook.
The comments from Fitch sovereign analyst Art Woo sent the rupee lower, reinforcing worries that India is still at risk of losing its investment-grade rating from the credit agency.
Although Woo described India's fiscal and economic reforms last year as a "step in the right direction," he also expressed concern that the government would miss its fiscal deficit target for the year, while saying the structural reform process was "sluggish."
"The negative outlook reflects Fitch's concerns over deterioration in India's economic and fiscal outlooks, particularly a sharp slowdown in growth, persistent inflationary pressures and weaker public finances," Woo said in a conference call.
The Indian economy extended its long slump in the September quarter, growing only 5.3 percent from a year earlier, below the 5.5 percent expansion seen in the three months to June, keeping it on track for its worst year in a decade.
Woo called growth "a bit disappointing" at a time of elevated wholesale price inflation, despite acknowledging signs of stabilisation in the near-term for both indicators.
The Fitch analyst also expressed concern about India's record current account deficit of 5.4 percent in the September quarter.
Fitch and Standard and Poor's last year cut their ratings outlooks for India to "negative", putting India in danger of being the first of the BRICS grouping of fast-growing economies to be downgraded to "junk" status.
Fitch and S&P also affirmed the country at BBB-, the lowest investment grade rating. Moody's has a "stable" outlook on its comparable Baa3 rating for India.
The government has since unveiled measures such as raising fuel prices and further opening up the retail sectors for foreign investment. The government is also aiming to keep its fiscal deficit at 5.3 percent for the year ending in March.
"The fact that rating agencies are not getting overly enthused by reform measures shows that they will wait for actual improvement in macro data to change their stance," said Samiran Chakrabarty, head of research at Standard Chartered Bank in Mumbai.
(Reporting by Lisa Twaronite in TOKYO and Rafael Nam in MUMBAI; Editing by Kim Coghill)
- Tweet this
- Share this
- Digg this
- UPDATE 2-Concordia finally heads for scrapyard after massive salvage operation
- Facebook beats Wall Street targets, stock hits record high |
- Seven arrests made in $1.6 million StubHub cyberfraud case |
- UPDATE 3-Seven arrested internationally in $1.6 million StubHub fraud
- UPDATE 3-Ex-Jefferies trader gets 2 years in prison in fraud case
India is set to offer Nepal a landmark pact to help develop its huge hydro-electric power potential as the South Asian giant takes another step to re-assert influence among smaller neighbours where China has been forging closer ties. Full Article
Jet Airways chairman says looking to restructure debts, talking to bankers Full Article
Honda's India unit to account for 25 pct of Asia Pacific sales by March 2017 - exec Full Article