Factbox-Key political risks to watch in India

India's economy is likely to grow at the slowest rate in a decade this year despite a spurt of economic reforms, and a busy electoral calendar will make managing a gaping fiscal deficit increasingly difficult to manage over the next few months.

RATINGS (Unchanged unless stated):

S&P: BBB-

MOODY'S: Baa3

FITCH: BBB-

Following is a summary of key political risks in India:

ELECTIONS AND ECONOMY

India's economy is set for its worst performance in a decade after three consecutive quarters of growth near 5.5 percent.

High government spending has led to a fiscal deficit that economist say is likely to hit 5.6 percent this year, exacerbated worse by a fall in revenues.

Prime Minister Manmohan Singh is in a tight spot. He needs to slash spending on popular subsidies and encourage investment through politically tricky reforms to revive growth ahead of a general election due early in 2014.

But with its eyes on the vote, the government is also promising to present a generous budget in the 2013/14 fiscal year.

Ratings agencies Standard & Poor's and Fitch have threatened a downgrade if the fiscal deficit is not tamed.

An important test will be the election in Gujarat, the thriving industrial state run by potential opposition candidate for prime minister Narendra Modi. Modi is popular and likely to win, but a decent performance by Singh's Congress party could encourage the government that its recent reform agenda is electorally palatable. A poor performance could strengthen anti-reform voices in the party. The election results are due to be released in late December.

Finance Minister P. Chidambaram has vowed not to let the deficit pass 5.3 percent of GDP - a tall order given the political pressures and weak demand for some of his revenue-raising projects such as a recent failed sale of 2G cellular spectrum.

... contd.

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