Abstract
S&P ratings on GIC, which were carried out in August 2001 does not give a rosy picture. The factors included budget deficit and national debt. Fear of the public finances going haywire was also on the minds. The article below related the rating scenario of GIC and the subsidiaries.
Reports suggest that the PI or the public information ratings of GIC or General Insurance Corporation was downgraded. This change also involved the subsidiaries of the company (General Insurance Corporation). S&P or Standard & Poor 's also brought about changes in the rating grades of foreign currency. This was the status as of August 2001.
S&P ratings on GIC indicated that the following grades were assigned to the company and the subsidiaries belonging to the company (GIC).
The ratings mentioned below are as of August 2001.
The four subsidiaries of General Insurance Corporation include:
United India Insurance Co
New India Assurance Co
National Insurance Co
Oriental Insurance Co.
The public information ratings or PI ratings changed from “BBB (PI)” to “BBB- (PI).
S&P ratings on GIC imply the budget deficits, which were not kept under check. Indebtedness in the domestic arena increased, which also was indicative from the ratings. It was ascertained that the debt of the Government could rise up to 40% of the gross domestic product or the GDP. Alternatively, it could also be 400% of the revenues earned. This figure was comparatively higher than most of the nations, which were rated under similar conditions.
S&P also changed the outlook of the rating to negative from stable. This was a cause of concern because it was feared that there could be further depletion of public finances and to add to this trauma,
Undue interest of few was spoiling the reforms in the public sector.
There were few other companies whose ratings were also downgraded. These corporate houses included:
Larsen & Toubro
Reliance Industries
Tata Power
Indian Oil Corporation
Indian Railway Finance Corporation
Power Finance Corporation
National Thermal Power Corporation