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| S&P affirms negative rating for India, warns of further cut | | | / Business Standard November 21,2001 | | | |
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| S & P Affirms Negative Rating For India, Warns Of Further Cut |
| / BUSINESS STANDARD Nov 21, 2001, 00:00 IST |
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Standard and Poor’s today affirmed the negative ratings for India's local currency rating and pointed out that it could be lowered further if the current disturbing fiscal and debt trends continued.
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| “The ratings could be lowered if current negative fiscal and debt trends continue or if government fails to stimulate economic growth through deeper structural reforms,” S&P’s said in a statement issued from Singapore. “Many encouraging announcements in the current year’s Budget designed to improve growth prospects remain unimplemented including steps to loosen unworkable labour laws and to introduce liberalisation into agricultural sector,” it added.
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The agency affirmed its BB foreign currency and BBB minus/a-3 for local currency long and short term sovereign credit ratings. The outlook remains negative.
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The oulook reflects the continued deterioration of the government's financial profile with persistently high fiscal deficit resulting in rising burden of public debt.
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“Failure to undertake structural reforms in a timely manner has eroded the margin of error for policy makers to avoid macroeconomic instability,” it said.
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The government’s already low level of fiscal flexibility (interest payments are projected to consume about half of the central government revenue this year) might worsen if the current decelration in GDP growth persists, it added.
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