The negative outlook on the Republic of India's ratings reflects the continued deterioration of the government's financial profile, with persistently high fiscal deficits resulting in a rising burden of public debt. Failure to undertake structural reform in a timely manner has eroded the margin of error for policymakers to avoid macroeconomic instability. The government's already low level of fiscal flexibilityùinterest payments are projected to consume about half of central government revenue this yearùmay worsen if the current deceleration in GDP growth persists. Growing government borrowing limits the resources available to the private sector, constraining GDP growth prospects and the pace of poverty alleviation. Lower economic growth, in turn, could result in weak tax revenue, larger fiscal deficits, and a rising
