S&P: Don't foresee immediate negative impact of budget on rating

Mumbai: Rating agency Standard & Poor’s does not foresee any immediate negative implication on India’s sovereign rating after the government outlined a high fiscal deficit target in the budget for the next fiscal year, said Takahira Ogawa, director of sovereign & IPF ratings.

He said that it was not easy to lower a large deficit substantially in the current macroeconomic environment.

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“Because if they do so, then it might have a very negative implication on the recovery of the macro economy which may be even more detrimental to our rating,” Ogawa said over telephone from Singapore.

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The government set a fiscal deficit target of 5.1 percent of gross domestic product for the fiscal year that begins in April, down from an expected 5.9 percent in 2011/12.

India’s rating is currently BBB- with a stable outlook.

Reuters