The rating agencies are also slamming into Asia. Today Fitch lowered its outlook on India by changing it to negative and confirming its rating at BBB-, the lowest investment grade. The news came on the same day that the Central Bank of India, Reserve Bank of India, has decided to keep interest rates unchanged. Instead, many economists and investors hoped for a cut in the key rate to stimulate growth.
Politics is the serious problem of the country and Fitch noted that the government's lack of action was one of the reasons for the revised outlook. According to Fitch, in the medium to long term India will be exposed to even more risks and, if structural reforms are not implemented, future growth will be threatened. An improvement in the operating environment is also needed to attract business and investment.
Furthermore, the negative outlook reflects India's limited progress towards fiscal consolidation and, in particular, in reducing the public deficit despite the improvement in the health of state governments. But in Delhi everything is silent.
