Global rating agency Standard & Poor's on Thursday warned Asia may see lower growth this year due to adverse impact of oil price pressure and tsunami, but said India will be an 'exception.'
"India, and perhaps Indonesia, are the exceptions to lower growth (in Asia-Pacific) during 2005," S&P said in its commentary 'Asia-Pacific sovereign outlook: Headwind may slow positive rating trend.'
S&P, however, warned India's high debt and debt service burdens as a proportion of government revenue could easily worsen an already weak fiscal flexibility as a result of increasing rates.
The rating agency identified the Philippines and Japan as the other Asian countries which could face similar risks.
Stressing that high oil prices would also affect trade, costs and inflation and even more government budgets across the Asian countries, S&P pointed out: "India might see its smallish current account surpluses eliminated, but currency appreciation pressures are still being felt thanks to capital inflows."
It asserted that India's fiscal cost of trying to prevent pass-through of the high oil price to customers through subsidies, price control and custom duties could be substantial if they are not addressed.
Indonesia and Malaysia would also face similar problems, S&P warned.
Commenting on the corporate sector and legal reforms to attract more foreign investments, it said: "India needs to deregulate its industries."
Maintaining a positive outlook on sovereign ratings of Asia-Pacific countries, S&P said that in India, Indonesia, Malaysia and Mongolia, political maturity and steady growth are likely to lead governments to continue with reform-minded policies, fiscal consolidation and economic restructuring and improve the investment climate for higher productivity.
Citing improving external liquidity and better prospects for stabilising the government's debt burden, S&P had changed its outlook on India's foreign currency ratings to positive from stable and local currency ratings to stable from negative last August.
