Global rating agency Standard & Poor's (S&P) on Thursday said it will review India's sovereign rating after the general election and its action will depend on the policy announcement of the new government.
While affirming the current rating, S&P has cautioned that it could downgrade India to speculative grade in case the next government is found incapable of reversing the slide in economic growth.
"Barring an unexpected deterioration of the fiscal or external accounts before the election, we expect to review the rating on India after the next general elections when the new government has announced its policy agenda," S&P said in a statement, retaining 'BBB-', the lowest investment grade rating with negative outlook.
The vibrancy of India's democracy will again come to the fore in general elections, which are due no later than May 2014, it noted.
S&P said the negative outlook indicates that it may lower the rating to speculative grade next year if the government that takes office after the general election does not appear capable of reversing India's low economic growth.
"If we believe that the agenda can restore some of India's lost growth potential, consolidate its fiscal accounts, and permit the conduct of an effective monetary policy, we may revise the outlook to stable," it said.
"If, however, we see continued policy drift, we may lower the rating within a year," it added.