S&P says India could see rating cut despite reforms

The Congress-led government of Prime Minister Manmohan Singh in the past few weeks has announced a string of reforms intended to boost foreign investment and spur the sharply-flagging economy.

The reiteration of the ratings downgrade threat — initially issued in April — sent India's stock market down by 162 points to close at 18,631.10.

Standard & Poor's (S&P) said there was “at least a one-in-three likelihood” of a downgrade of India's sovereign rating within the next 24 months.

The statement came a day after the International Monetary Fund lowered its forecast for India's 2012 growth by one percentage point to 4.9 percent, due to stalled investment caused by graft issues, red tape and poor business sentiment.

India's growth right now is bumping along at 5.5 percent, according to the most recent official quarterly figures — its slowest pace in about three years.

The ratings agency said global economic uncertainties are intensifying.

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