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S&P may slash India rating on growth concerns: Reports

India's bond yields spiked after S&P flagged risk to sovereign rating.

ETMarkets.com|
Updated: Dec 11, 2019, 04.31 PM IST
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“In India growth has slowed substantially as a result of a credit crunch and weakening domestic demand,” said a statement by ADB.
Rating agency S&P may lower India’s rating if the growth does not recover, ET NOW reported quoting agencies. However, the rating firm added India's long-term economic outperformance remains intact.

"We are forecasting real GDP growth to decelerate to 5.1 per cent in FY20," it said.

Bond yields spiked after S&P flagged risk to sovereign ratings. The 10-year-benchmark bond yield was up 0.70 per cent at 6.76 per cent at around 3.45 pm (IST).

In another development, the Asian Development Bank (ADB) also revised the estimate for India's growth rate in the financial year 2019-2020 downwards to 5.1 per cent from the previous forecast of 6.5 per cent, according to IANS.

It also cut the estimate for the next fiscal, FY 2020-21 to 6.5 per cent from 7.2 per cent.

“In India growth has slowed substantially as a result of a credit crunch and weakening domestic demand,” said a statement by ADB.

This is another addition to the series of downward revisions in India's economic forecast for the ongoing fiscal.

The Reserve Bank of India (RBI) in its monetary policy announcement, last week, revised its FY2019-20 outlook to 5 per cent from 6.1 per cent.

The central bank said that the July-September GDP growth had turned out to be significantly lower than projected and various high-frequency indicators suggest that domestic and external demand conditions have remained weak.

The growth rate for the second quarter slumped to a 6-year low of 4.5 per cent.

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