Dismissing fears of a rating downgrade, finance minister P Chidambaram on Thursday said the government will take a host of reform initiatives over the next two years to spur growth.
“I don’t think there is a serious threat of a downgrade, but we take the talk of a downgrade seriously. We will engage with rating agencies and convince them that India does not deserve a downgrade,” Chidambaram said at a press conference on the sidelines of the IMF-World Bank annual meetings in Tokyo.Chidambaram was replying to a question on the possibility of a downgrade of India’s credit rating to junk grade by global agency Standard and Poor’s (S&P) in 24 months if additional reforms measures are not implemented.
“(S&P) said there is a one-in-three chance over 24 months. I think 24 months is a long time. You will see a lot of reforms, a lot of change and a lot of strengthening of the Indian economy,” he said, adding in terms of growth and potential for growth, India was way above most countries.
S&P in its report on Wednesday said there was a likelihood of a rating downgrade if India’s economic growth prospects dim, potential investment climate worsens or fiscal reforms slow down.
He said the easy money policy being followed by the developed world would not only bring more money into emerging nations, but also boost commodity prices.