India’s failure to reign in its high debt and fiscal deficit has compelled Standard & Poor’s to lower its outlook for the country.
This news has signaled a wrong message to investors, who were already disturbed because of slow growth. Investors are worried because India’s government has failed to improve infrastructure,
Credit analysts predict that India’s GDP growth will be 5.3% in the current fiscal year ending March 31, 2013. They also fear that Standard & Poor’s can downgrade India’s debt rating if the government failed to introduce fiscal reforms.
India’s economic planners are not paying attention to the growing fiscal and current-account deficits. Standard & Poor’s says that India’s current-account deficit has increased from 2.6% to 3.7%. This is bad for India’s future.