<div>A proposed debt restructuring package for India's struggling power distributors will not impact the country's sovereign ratings and instead could be positive in the medium-to-long term, Standard and Poor's said on 10 September.</div><div> </div><div>India plans to restructure part of the debt that state-owned power distribution companies owe to financial institutions, in a bid to reform the power sector and improve capacity.</div><div> </div><div>According to S&P, Indian banks have a total exposure to the overall power sector of 3.3 trillion rupees, which equals 7.2 per cent of all their loans.</div><div> </div><div>The restructuring could provide the loss-making distribution companies temporary relief and help them to cover costs in the short-term, S&P said, though it warned that India needs to provide more lasting solutions to its power problems.</div><div> </div><div>India last month experienced one of the world's worst blackouts following a breakdown of transmission grids, and rolling power cuts are part of daily life.</div><div> </div><div>The proposed debt restructuring "does not significantly affect our sovereign rating on India," S&P said in its report.</div><div> </div><div>S&P roiled domestic markets in April when it cut India's sovereign outlook to "negative", putting at risk the country's current rating of "BBB-", the lowest investment-grade rating by the agency.</div><div> </div><div>India needs to improve the credit quality of the distributors and allow greater private sector participation in power transmission and distribution in order to provide a long-term solution to power shortages, the agency said.</div><div> </div><div>"The cost of doing business in India could increase if the cycle of high system inefficiencies, technical and commercial losses, and under investment in capacity continues," S&P said.</div><div> </div><div>"This could in turn affect the country's growth prospects in the long run and weigh on the sovereign rating on India." <br /><br />(Reuters)</div>
