S&P warns India could face junk status

NEW DELHI, May 18, 2013 (AFP) – India faces at least “a one-in-three” chance of losing its prized sovereign grade rating, global ratings agency Standard and Poor’s has warned, in another blow to the scandal-tainted Congress government. The agency said it may also cut India’s ratings if it concludes that Asia’s third-largest economy will not revert to higher seven to eight percent growth levels notched up earlier in this decade.

India’s growth right was bumping along at 5.0 percent for the last financial year to March 2013, the lowest level in a decade, but the government expects it to pick up to six percent this year and is targeting seven percent in 2014.

Also despite government efforts to cut red tape in implementing long-delayed infrastructure and power projects, its “success in raising investment growth remains uncertain,” credit analyst Takahira Ogawa said. The announcement late Friday comes after finance ministry officials have been arguing for a ratings upgrade, saying the government has been taking strong steps to curb India’s financial deficit and promote investment.

India’s BBB-minus investment rating is already the lowest among its BRICS peers Brazil, Russia, China and South Africa, and cutting it to “junk stat