India might be 1st BRIC to lose investment rating: S&P

As per the ratings agency Standard & Poor’s India may become the 1^st BRIC country to be degraded in investment grade rating.

What is the reason that might lead India loose its investment rating?

Slow GDP growth and degree of susceptibility to economic shock are reasons behind the possible fall in ratings

Rating prospects shows negative trend from stable in April 2012 because of India’s slower GDP growth scenario and the risk of erosion of its external liquidity and fiscal flexibility. The Negative stance also points to the risk that Indian authorities may be unable to respond to economic shocks quickly and decisively enough to safeguard the country’s current creditworthiness. But Indian economy still remains in much better form to endure this period of severe global uncertainty than it was in the early 1990s, when it underwent a balance-of-payments crisis

Month: Current Affairs - June, 2012