According to the revised ratings by Fitch Ratings, India, owing to her economy has been demoted from ‘stable’ to ‘negative’. This has been affirmed by the long-term foreign- and local-currency issuer default ratings.
“Against the backdrop of persistent inflation pressures and weak public finances, there is an even greater onus on effective government policies and reforms that would ensure India can navigate the turbulent global economic and financial environment and underpin confidence in the long-run growth potential of the Indian economy,” said Art Woo, Director, Fitch, Asia-Pacific Sovereign Ratings.
The revision depicts heightened risks which will be faced by India’s medium to long-term growth potential that will slowly decline and deteriorate. However, it has quoted that this can be curbed if further structural reforms are introduced, which can enhance effectiveness of the government. The norms, if introduced will create positive operational environment in fields of enterprise and private investments.
However, India’s chief economic adviser Kaushik Basu said that the drop in ratings are because of “herd mentality” prevalent in ratings agencies.
“There is a lot to be done and the next six months will be crucial,” said Basu, as he addressed journalists at the Foreign Correspondents’ Club, New Delhi. “The whole statement of Fitch is a pretty positive statement.”
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