News

    Credit Downgrade Highlights India's Economic Challenges

    Indians walks past roadside stalls selling clothes and miscellaneous items in New Delhi, India. Indian Finance Minister, Mukherjee, presented India's new budget amid concerns about inflation, the country's falling growth rate, large deficit, FILE March 16
    Indians walks past roadside stalls selling clothes and miscellaneous items in New Delhi, India. Indian Finance Minister, Mukherjee, presented India's new budget amid concerns about inflation, the country's falling growth rate, large deficit, FILE March 16


    The U.S.-based financial ratings agency Standard & Poor’s has revised its credit outlook for India from stable to negative.  The downgrade has brought into sharp focus the challenges of India's slowing economy.

    Standard & Poor’s revised outlook for India from stable to negative was prompted by concerns about the country’s high debt and fiscal deficit and its failure to move ahead with critical economic reforms.

    Finance Minister Pranab Mukherjee has said there is no need to panic. But officials admit the rating agency’s move is a wake-up call. The government is promising some financial reforms during the ongoing session of parliament.

    Economist A. Prassana at ICICI Securities in Mumbai says the government needs to bring its huge spending under control. But he says there are concerns that stiff political opposition will continue to pose a challenge to implementing key economic reforms. 

    “The most urgent task or the most important step is to contain the fiscal deficit. I think they should try and better which they have set for themselves, which is five point one percent of GDP. There is a long list of reforms," Prassana stated. "What has been happening there has been a lot of talk over the last six months. But ultimately no action is being seen on the ground.” 

    One of the most critical reforms is cutting down fuel subsidies given to consumers, which are a huge drain on government finances.

    Economists stress the need for quick action. They point out that India risks losing its prized investment grade status if its financial situation worsens over the next one to two years. Standard and Poor’s has warned that India faces a one-in-three chance of losing its triple-B rating.

    Such a downgrade would scare foreign investors. It would make borrowing more expensive for India. It would also weaken the local currency, which has already depreciated against the dollar by nearly 20 percent in the last year. This in turn would push up the cost of oil in a country that imports more than three quarters of its crude oil requirement.

    Observers say India needs to restore confidence in the economy. While officials expect the pace of growth to accelerate this year, economist Prassana is skeptical.  “I don’t see we are going to see any robust recovery. If the government does not get its act together we will grow at sub-optimal levels," he said. "And therefore fall behind our own targets we set ourselves in terms of development targets.”

    India’s economy has grown briskly for several years and the country is seen as an important emerging economy. But growth slipped below 7 percent last year, the lowest in three years. 

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    'No Means No' Program Targets Sexual Violence in Kenyai
    X
    February 08, 2016 4:30 PM
    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video New Hampshire Voters Are Independent, Mindful of History

    Once every four years, the northeastern state of New Hampshire becomes the center of the U.S. political universe with its first-in-the-nation presidential primary. What's unusual about New Hampshire is how seriously the voters take their role and the responsibility of being among the first to weigh in on the candidates.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Bhutanese Refugees in New Hampshire Closely Watching Primary Election

    They fled their country and lived in refugee camps in neighboring Nepal for decades before being resettled in the northeastern U.S. state of New Hampshire -- now the focus of the U.S. presidential contest. VOA correspondent Aru Pande spoke with members of the Bhutanese community, including new American citizens, about the campaign and the strong anti-immigrant rhetoric of some of the candidates.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video Sanders, Clinton Battle for Young Democratic Vote

    Despite a narrow loss to former Secretary of State Hillary Clinton in last week's Iowa Democratic caucuses, Vermont Senator Bernie Sanders secured more than 80 percent of the vote among those between the ages of 18 and 29. VOA correspondent Aru Pande talks to Democrats in New Hampshire about who they are leaning towards and why in this week's primary.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.
    Video

    Video Genius Lets World Share Its Knowledge

    Inspired by crowdsourcing companies like Wikipedia, Genius allows anyone to edit anything on the web, using its web annotation tool
    Video

    Video In Philippines, Mixed Feelings About Greater US Military Presence

    In the Philippines, some who will be directly affected by a recent Supreme Court decision clearing the way for more United States troop visits are having mixed reactions.  The increased rotations come at a time when the Philippines is trying to build up its military in the face of growing maritime assertiveness from China.  From Bahile, Palawan on the coast of the South China Sea, Simone Orendain has this story.
    Video

    Video Microcephaly's Connection to Zika: Guilty Until Proven Innocent

    The Zika virus rarely causes problems for the people who get it, but it seems to be having a devastating impact on babies whose mothers are infected with Zika. VOA's Carol Pearson has more.
    Video

    Video Stunning Artworks Attract Record Crowds, Thanks to Social Media

    A new exhibit at the oldest art museum in America is shattering attendance records. Thousands of visitors are lining up to see nine giant works of art that have gotten a much-deserved shot of viral marketing. The 150-year-old Smithsonian American Art Museum has never had a response quite like this. VOA's Julie Taboh reports.