* S&P and Fitch have negative outlook; Moody's outlook is
* India bond yields rise 4 bps after S&P statement
* S&P analyst says India position has improve in past year
* India had pitched for S&P upgrade in April
(Adds details, comment from conference call, background)
By Suvashree Dey Choudhury and Shamik Paul
MUMBAI, May 17 (Reuters) - Standard & Poor's reiterated its
negative outlook on India's credit rating, which is one notch
above "junk", warning of the need to follow through on reforms
and dealing a blow to a government that had recently pitched for
The rating agency said the main drag on India's rating is a
high fiscal deficit and heavy government borrowing, although it
also said India's position had improved over the past year.
S&P's statement came as Finance Minister P. Chidambaram was
in Paris to sell investors on India, part of a road show series
that in recent months has taken him to New York, Singapore,
Tokyo, London, Hong Kong, Frankfurt, Ottawa, and Toronto.
"We have indicated compared to one year ago, there (is) some
easing of the pressure towards the downgrade of the rating," S&P
credit analyst Takahira Ogawa said on a conference call on
"But nonetheless there is still more than one-third of
chance for downgrade unless we see significant improvement of
the factors that we mentioned," he said.
India's benchmark 10-year yield rose 4 basis
points to 7.41 percent from levels before S&P issued a statement
affirming the BBB- rating and negative outlook. The yield closed
at 7.39 percent on Thursday.
Since taking office in July, Chidambaram has pushed a series
of reforms aimed at shoring up government finances and reviving
investor confidence in an economy that grew at just 5 percent in
the fiscal year that ended in March, its worst in a decade.
However, the most recent parliamentary session ended early
amid heated political acrimony over recent corruption scandals,
stranding several pieces of legislation including a land reform
"I would like to see more concrete steps, particularly on
getting India's growth potential back - if not growth at least
the potential - which is really getting hampered by the status
quo in a lot of these reforms which ought to have come on
board," said Shubhada Rao, chief economist at Yes Bank.
Chidambaram has said he will stick to a budgeted fiscal
deficit target of 4.8 percent of gross domestic product in the
fiscal year ending March 2014 after being able to trim the
deficit to around 5 percent in the previous fiscal year.
"We may revise the outlook to stable if the government
carries through with its plans to unleash public and private
investments (for example, by enacting the land acquisition
bill), to implement a nationwide government sales tax, or to
further trim fuel and fertilizer subsidies," S&P said.
S&P and its rival Fitch had cut their outlook on India to
negative last year, warning the country of a possible rating
downgrade to "junk" on worsening public finances, a slowing
economy and persistent political gridlock in New Delhi.
In an April 25 meeting with S&P, Indian officials argued the
outlook should be changed, and the country deserved an upgrade
for actions taken by Prime Minister Manmohan Singh's government
to put finances in order and bolster investor confidence.
(Additional reporting by Swati Bhat and Neha Dasgupta; Writing
by Tony Munroe; Editing by Robert Birsel)