India could face investment downgrade
India could be the first of the BRIC countries to face an investment grade downgrade according to the credit rating agency Standard and Poor’s.
The agency cites a slowdown in GDP growth and political problems as the key issues in the report which is entitled “Will India be the first BRIC fallen angel”.
Many Indian newspapers are commenting on the report and highlight ten areas where the country is failing. They are:
1. A divided leadership with the Cabinet being split on a number of economic issues
2. Sonia Gandhi as leader of the Congress Party with ultimate power whilst an appointed prime minister with weakened powers tries to run government
3. An unelected prime minister
4. A prime minister with limited influence over his Cabinet
5. A Congress Party divided on too many economic issues
6. Concerns over retrospective tax has frightened some investors and makes investment more uncertain in the country
7. Business confidence hit by a ‘policy paralysis’ within central government and failure to implement key announced reforms
9. Possibility of growth slipping to 4-5%
10. Stagflation if the economy is allowed to drift.