Bangalore, April 25 (IANS) 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, a senior Wipro executive said Wednesday.
“It is unfortunate though was expected, as it (negative rating) has been based on high fiscal deficit (5.9 percent) against 4.6 percent 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 Senapaty told reporters here.
Earlier in the day, 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,” Senapaty said during the IT bellwether’s financial performance review for fourth quarter (Jan-March) of last fiscal.
In light of finance minister Pranab’s Mukherjee statement that subsidy burden would be reduced to lower the fiscal deficit for this fiscal year, Senapaty 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.
The ratings agency, however, kept India’s long-term rating unchanged at BBB-, which is the lowest investment grade rating.
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 international rating agency also affirmed A-3 short-term unsolicited sovereign credit ratings on the country.