Fitch Ratings downgraded India to BBB-

Fitch Ratings downgraded India's economic outlook to negative from stable, saying the country's growth outlook could deteriorate if policy-making and governance do not improve. The rating agency affirmed the economy's long-term foreign- and local-currency issuer default ratings (IDRs) at 'BBB-', the lowest investment grade. Fitch said the outlook revision reflected heightened risks that India's medium- to long-term growth potential will gradually deteriorate if further structural reforms were not hastened, including measures to enhance the effectiveness of the government and create a more positive operational environment for business and private investments. "India faces an awkward combination of slowing growth and still-elevated inflation. India also faces structural challenges surrounding its investment climate in the form of corruption and inadequate economic reforms," Fitch said in a statement. The "negative" outlook also reflected India's limited progress on fiscal consolidation and, in particular, on reducing the central government deficit despite improvement in the financial health of state governments, it said. 

Finance Minister Pranab Mukherjee said on Monday Fitch has not taken note of recent structural reforms in the economy including the strengthening of public finances, after the rating agency cut its outlook on Asia's third largest economy . "The concerns expressed by Fitch on the economic growth potential, inflationary pressures, and weak public finances are based on earlier data. Government has already taken note of such concerns," Mukherjee said in a statement.