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04-26-2012, 10:21 PM #1
S&P rating downgrade was inevitable: Wipro CFO Suresh Senapathy
Downgrading of India's sovereign rating to negative from stable by global rating agency Standard & Poor's (S&P) was a cause for concern though inevitable due to multiple factors.
"It is unfortunate, though was expected, as it (negative rating) has been based on high fiscal deficit (5.9 per cent) against 4.6 per cent of the GDP (gross domestic product) target in previous fiscal (2011-12) and what has been projected in this fiscal (2012-13)," Wipro Chief Financial Officer Suresh Senapathy said.
On Wednesday, S&P lowered its outlook on India and warned the government of further downgrading due to deteriorating economic indicators and slow progress on fiscal reforms.
"The negative outlook is a cause for concern as the country's fiscal instability has been based on multiple factors such as higher inflation, weakening rupee, huge current account deficit and rising crude oil prices," Senapathy said.
In light of Finance Minister Pranab's Mukherjee statement that subsidy burden would be reduced to lower the fiscal deficit for this financial year, Senapathy said the country, owing to strong fundamentals, would still attract funds from global markets.
Wipro Chairman Azim Premji, however, declined to comment on the S&P's rating as he was yet to read the report.
On policy paralysis and fears of slowdown in reforms, Premji said: "I think what newspapers comment on whether reforms will be stepped up or down. These are obvious from what we see".
The ratings agency has kept India's long-term rating unchanged at BBB-, which is the lowest investment grade rating. The international rating agency also affirmed A-3 short-term unsolicited sovereign credit ratings on the country.