Standard & Poor's (S&P) today affirmed its BB+ long-term rating on India with a stable outlook while maintaining a B rating for the short-term."India's average annual economic growth over the past five years of 6.5% is higher than any other major economy except China," Ping Chew, credit analyst of S&P, said in a statement from Singapore today."Growth has been fuelled by steady economic reforms since 1991. We expect India to maintain or alleviate some of its pressing poverty infrastructure needs," Chew added.Expressing concern over India's rising fiscal deficit, Chew said: "India still has a pressing fiscal problem, and its debt trajectory is on a rising trend."Despite the implementation of VAT and general tax revenue buoyancy, which has permitted some fiscal consolidation, he projected the general government deficit to reach 8.7% of GDP for fiscal 2005-06 including government transfers to state-owned oil companies to compensate in part for their public subsidies. "The gross general government debt and guarantees to GDP have risen to 101% in 2005 from 87% in 2000," Chew said."We expect India to maintain or even exceed this pace of growth over the medium term, which in turn will allow India to alleviate some of its pressing poverty and infrastructure needs," Chew said.
