Fitch Ratings has revised India’s outlook to negative from stable. this news came in at a time when the market was grappling with Reserve Bank of India’s unexpected stance of not going with the popular expectation of a rate cut.

Fitch says the revision in its outlook is reflective of heightened risks that India’s medium- to long-term growth potential will gradually deteriorate if further structural reforms are not hastened, including measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments.

The negative outlook also reflects India’s limited progress on fiscal consolidation and, in particular, on reducing the central government deficit despite improvement in the financial health of state governments.

“Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy,” said Art Woo, Director in Fitch’s Asia-Pacific Sovereign Ratings group.

Source: Moneycontrol.com

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