Chidambaram vows more policy changes to ward off S&P downgrade

Finance minister P Chidambaram today said his government will extend the current wave of policy changes with new sets of policy initiatives over the next two years to boost investment and secure the Indian economy from further downgrade by credit rating agency Standard and Poor's.

He, however, saw no serious threat of a further downgrade of the country's credit rating from Standard and Poor's current rating of `BBB-, which is a notch above junk grade.

S&P had downgraded India in April  to `BBB-`, which is also the lowest investment rating for any large emerging economies in the BRICS grouping.

"I don't think there is a serious threat of downgrade", he said responding to queries on S&P's recent threat of downgrade of India's credit rating to junk grade in 24 months unless more policy measures were not implemented.

Speaking to media on the sidelines of the IMF-World Bank annual meetings in Tokyo, Chidambaram said there would be lot of action on the reforms front in the next 24 months.

S&P in its report released on Wednesday, had said there was one-in-three chance of a rating downgrade for India if "the country's economic growth prospects dim, its external position deteriorates, its potential climate worsens, or fiscal reforms slow".

We will ''convince them that India does not deserve a downgrade and in terms of growth and growth potential...India is way above most countries of the world", he said.
 
S&P, like overseas investors, is not convinced despite the recent shifts in policy allowing more FDI in areas like retail trading, airlines, power trading, broadcast services etc, announced in September, but said the recent measures have slightly improved the country's prospects. The outlook could still turn negative over the next 24 months, S&P said.

S&P's warning coincides the first-ever visit to India by US Federal Reserve chairman Ben Bernanke and US treasury secretary Timothy Geithner.