MUMBAI (Reuters) - Standard & Poor’s Ratings Services said on Thursday India’s budget had adopted a “cautious” approach in tackling some of economy’s structural weaknesses and said it would have no bearing on the country’s sovereign rating.
“The commitment of the new Indian government to maintaining the trend of fiscal consolidation would benefit the sovereign’s credit fundamentals. However, the budget announced today has opted for a cautious approach toward tackling some of the economy’s structural weaknesses,” S&P said in a statement.
Earlier, Finance Minister Arun Jaitley unveiled a budget that seeks to revive growth and curb borrowing, but left open questions on how it will reduce the fiscal deficit.
S&P added the budget would have “no immediate impact” on India’s sovereign rating. The agency is the only of the three major ratings providers to rate India with a “negative” outlook.
S&P said it could lower India’s rating to below investment-grade from the current “BBB-minus” rating should the new government prove unable to reverse India’s low economic growth.
Alternatively, S&P said it could revise the outlook to stable if the government can restore some of India’s “lost growth potential and consolidate its fiscal accounts.”
Reporting by Rafael Nam