New economic team must act to fix sentiment

The international credit rating agency Fitch has lowered the outlook for India’s sovereign rating to “negative” from “stable”, saying that high inflation, the lack of progress in fixing the fiscal deficit, and stalled reform required that action. While there are many reasons why credit rating agencies have lost credibility since the crisis of 2008 – not least their seeming inability to accurately judge the risk of default, which is rationally still negligible with India – they can at least still serve as a marker of investors’ lack of confidence in the India story.

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