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Will India Be The First “Fallen Angel” of the BRIC countries?



MUMBAI – Citing slowed growth and stalled reforms, Standard & Poors has warned India that it risks losing its investment-grade rating, and being downgraded to junk category, reports the Times of India.

S&P assigned much of the blame to politicians, notably Prime Minister Manmohan Singh. “It would be ironic if a government under the economist who spurred much of the liberalization of India’s economy and helped unleash such gains were to preside over their potential erosion.”

The recent sharp drop in India’s quarterly GDP growth numbers (a nine-year low of 5.3% for the three months ending in March) and the falling value of the rupee has led S&P to wonder if India will be the “first ‘fallen angel’ of the BRIC nations.” BRIC refers to the emerging economies of Brazil, Russia, India and China.

India’s S&P rating is presently BBB-, the lowest investment rating. The agency took aim at the divided leadership between Congress party leader Sonia Gandhi and her party ally the 'unelected' Singh. S&P had upgraded India to investment grade BBB rating in January 2007, after four years of above nine per cent growth.

Outlook magazine noted that: "The report comes at a time when some commentators are wondering if the 'I' in BRIC now stands for Indonesia."


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