Rating agency Standard & Poor's has cautioned that India's long-term credit rating of BBB-/ Stable/A-3 was under threat as the balance for sovereign credit rating may slightly be shifting towards the negative.
A report by S&P's credit analyst Mr Takahira Ogawa, titled ‘Several Factors Could Weigh On India's Current Stable Sovereign Rating in 2012' said that high inflation, weak government fiscal position and slower economic growth have hurt investor confidence in the rupee and led to capital outflows. This has weighed on the stable sovereign outlook on India, it said.
Mr Ogawa said that uncertainty in global financial markets and the European sovereign debt crisis could add to pressures on India and confidence will be boosted only if the Government is able to implement measures to improve economic growth and fiscal prudence.
S&P said it had factored in inflation and political uncertainty that may lead to higher Government subsidies and reforms getting stalled and may not downgrade or revise the long-term rating in the near future.