India credit outlook cut by agency

Agence France-Presse

The move came a week after India's government unveiled a mini-budget that brought the fiscal deficit for the current financial year to 6 percent of gross domestic product - more than double an initial target of 2.5 percent and the highest in 18 years.

"The outlook revision reflects our view that India's fiscal position has deteriorated to a level that is unsustainable in the medium term," Standard and Poor's credit analyst Takahira Ogawa said in a statement.

The agency said while it had changed the outlook on the long-term sovereign credit rating to negative from stable, it had maintained its "BBB-" long-term and "A-3" short-term sovereign credit ratings on India. "BBB-" or higher is considered investment grade.

The fiscal slippage in the government's interim budget "calls into question" India's commitment to reducing its fiscal deficit, Ogawa said.In the budget, acting finance minister Pranab Mukherjee said the global slump meant more spending was needed to spur India's economic growth.