Mumbai, Apr. 25

Standard & Poor’s on Wednesday downgraded India’s credit outlook to negative as a weakening economy and gaping fiscal deficit put the country’s prized investment-grade rating at risk.

The agency maintained India’s rating at BBB-, but warned it faces at least a one-in-three chance of losing its status if its financial situation worsens.

The "BBB-" is one notch above "junk," which carries an increased risk of default and would see India having to pay higher interest rates on its public borrowing.

"India’s investment and economic growth have slowed and its current-account deficit has widened, resulting in a weaker medium-term credit outlook," S&P credit analyst Takahira Ogawa said in a media conference call.

"We are revising the outlook on the long-term ratings on India to negative."

Asia’s third-largest economy is battling stubborn inflation, the widest budget deficit of all major emerging economies, a weak fiscal position and slower growth on the domestic front.

Uncertainty in global markets and Europe’s long-running sovereign debt crisis have added to the pressures.

India’s benchmark Sensex share index fell 150 points after the S&P announcement before retracing some of its losses to trade down nearly a percentage point, or 133.21 points, at 17,090.98.