India could be in danger of losing its investment-grade credit rating, after Standard & Poor’s cut its outlook to negative from stable.
Bloomberg reported Wednesday that the ratings agency cited slowing economic growth and an increasing current-account deficit as reasons for its action regarding the country’s BBB rating. That is the lowest investment grade S&P provides.
In a statement, S&P said, “We are revising the outlook on the long-term ratings on India to negative to reflect at least a one-in-three likelihood of a downgrade.” The agency did, however, reaffirm the current BBB rating for the present.
Dangers to the Indian economy, said S&P, could come from diminishing trade performance, a fall in prospects for growth, or a delay in implementing fiscal reforms. India, among the largest emerging-market economies, sports the largest budget deficit. In addition, the gap in its current accounts hit an all-time high of $19.6 billion in the fourth quarter of 2011.