UPDATE: S&P revises outlook on India to -ve

Global rating agency Standard & Poor's downgraded its outlook on India's long-term sovereign credit rating from stable to negative today, stating that the country's fiscal situation had deteriorated to unsustainable levels.

The rating agency attributed the deterioration to the Rs 78,000 crore farm loan waiver and the acceptance of the recommendations of 
the 6th Pay Commission, besides the overall meltdown in the global economy.

WHAT S&P SAYS:

• FY09 govt deficit pegged at 11.4% including off-budget items

• FY10 deficit estimated at 11.1%

• BBB- (Triple B Minus) rating affirmed for India

• Fiscal deficit could widen with one more stimulus package

S&P has affirmed its BBB- (Triple B minus) long-term sovereign rating for India and its short-term rating of A-3.

The rating agency said that it expects government deficit, including off-budget items, to increase to 11.4 per cent in 2008-09. The deficit was at half that level at 5.7 per cent in the previous financial year.

The deficit will continue to remain high in the next fiscal (2009-10) and has been pegged at 11.1 per cent.