Standard & Poor’s Ratings Services just minutes ago revised the outlook on the long-term sovereign credit rating on the Republic of India to negative from stable. This is a Real bad News at the time of crisis. Well, S&P has cited concerns over rising fiscal deficit due to reckless spending by the UPA Government.
Takahira Ogawa of S&P said,
The government has implemented various policies that increase stress on its fiscal position ahead of the general election, which is expected to be held in May 2009. We expect the deficit to remain high at 11.1% in fiscal 2009-2010. The fiscal deficit could widen if the next government implements another stimulus package.
With an eye on the forthcoming elections, the Govt has lost control over its spending amidst Poor Tax Collections. We at FreePress don’t give weightage to S&P ratings this is the same company which kept its eyes closed when the Trillion Dollar Financial Crisis has rocked the US, the worst in its history. However, FIIs rely on these ratings and will likely lead to fresh sell off.