India's policy reforms to affect sovereign ratings: Standard and Poor

Apr 15 2014, 11:32 IST
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The world's biggest-ever election is under way in India, with Hindu nationalist Narendra Modi, the prime-ministerial candidate of the Bharatiya Janata Party (BJP), taking on the ailing ruling Congress party and several regional parties. (AP) The world's biggest-ever election is under way in India, with Hindu nationalist Narendra Modi, the prime-ministerial candidate of the Bharatiya Janata Party (BJP), taking on the ailing ruling Congress party and several regional parties. (AP)
SummaryThe direction and pace of policy reforms in India, more than which political party takes control after elections, will have a bearing on the sovereign rating, said Standard and Poor's rating agency on Tuesday.

The direction and pace of policy reforms in India, more than which political party takes control after elections, will have a bearing on the sovereign rating, said Standard and Poor's rating agency on Tuesday.

"An important factor is how fragmented the government will be. The more parties involved in the next coalition government, the more likely policies will be incoherent and less supportive of credit attributes," said Kim Eng Tan, sovereign credit analyst at S&P, in a statement.

The world's biggest-ever election is under way in India, with Hindu nationalist Narendra Modi, the prime-ministerial candidate of the Bharatiya Janata Party (BJP), taking on the ailing ruling Congress party and several regional parties.

Most surveys predict BJP will win the biggest chunk of seats but fall shy of the halfway mark, forcing them to seek a coalition with the powerful regional parties. Voting runs until May 12 and results are due on May 16.

S&P has a BBB- rating on India with a negative outlook and has warned of the risks of a ratings downgrade in the absence of structural reforms, fiscal consolidation and if economic growth decelerates further.

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