Credit rating agency Standard and Poor's said on Monday there is no immediate threat to India's sovereign debt rating of BBB, though loose fiscal policy and the government's inability to carry forward economic reforms could have implications in the medium term.
"We do not see an immediate impact on India's sovereign rating (BBB-/stable) resulting from the lowering of the US sovereign rating to AA+," S&P sovereign analyst Takahira Ogawa said in a statement in New Delhi.
S&P recently lowered the sovereign rating of the US to AA+ from AAA, affecting stock markets worldwide, including India (See: S&P lowers US rating from `AAA' to `AA+'). Similar threats loom over some European nations, including possibly France.
The ratings reflect the ability and willingness of the rated entity to meet financial obligations.
Referring to problems with regard to high inflation and the fiscal deficit in India, Ogawa said, "Potential longer-term consequences may point to negative factors."
He further said that while tight policies could have a positive bearing on the country's rating, any deterioration in fiscal health and setbacks on economic reforms might result in a downgrade.