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S&P downgrade not to affect economic growth

A decision by credit rating agency Standard and Poor's to downgrade India's local currency debt ratings to "junk" will not affect the country's economic growth, a senior official of the finance ministry's said on Friday.

"We have very good export growth so far. Industrial growth in the first four months has also been good and major fears of drought have fortunately receded," finance secretary S Narayan told reporters when asked if the downgrade would affect economic growth.

He said the downgrade would also not affect the government borrowing programme.

S&P cut local debt ratings to junk bond levels on Thursday, citing a mounting debt burden and vulnerable public finances. It cut the long-term local currency rating sovereign rating to BB-plus from BBB-minus and the short-term rating to B from A3.

Narayan said besides India's internal debt being well under control, the country is not dependent too much on external debt.

"Ninety-eight per cent are domestic borrowing. The downgrading will not affect government's borrowing programme", he said adding debt as a percentage of GDP has remained constant for the last 2 or 3 years."

(With additional inputs from PTI)

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