New Delhi: Global rating agency Standard & Poor's on January 8 maintained its "negative" outlook and the junk 'BB' rating on India's foreign currency despite the swelling 70 billion USD forex reserves and higher GDP (Gross Domestic Product) growth of 5.8 per cent in the second quarter of the current fiscal.

The rating agency cited the worsening fiscal situation for retaining the "BB" for foreign currency long-term rating and "BB+" rating for local currency, as assigned by it in September 2002.

"Political compulsions are likely to prevent significant fiscal adjustment through reduced government spending, placing the burden of change on the revenue side," S&P said in a statement on January 8.

S&P cut India's ratings following government decision to defer disinvestment for oil PSUs (Public Sector Undertakings).

PTI