Fitch downgrade: Pranab says govt taking steps to improve investment inflows
BT Online Bureau June 19, 2012Finance Minister Pranab Mukherjee has said the government is taking steps to improve inflow of foreign investment and the impact of the initiatives will become visible after some time.
On Monday, rating agency Fitch lowered India's credit outlook to negative from stable, citing reasons such as corruption, inadequate reforms, high inflation and slow growth. It is the second agency to lower outlook after Standard and Poor's.
"In certain areas we have to take appropriate measures. We have already started taking appropriate measures...These have started yielding results. But its impact will take some time," Mukherjee said while responding to queries on the issues raised by Fitch.
S&P had in April lowered India's rating outlook to negative from stable. It also warned on June 11 that the country may be the first in the BRIC grouping to falter and its sovereign credit rating may slip below investment grade.
The government, Mukherjee said, had taken note of the concerns expressed by Fitch.
"There is some improvement in FDI and FII inflows" he said, adding the steps taken by the government to relax External Commercial Borrowings (ECB) norms and creation of Infrastructure Debt Fund (IDF) too were yielding results.
The finance ministry on Monday rejected the assessment of Fitch saying that its action was based on "old data."
Mukherjee had said in a statement, "Fitch has primarily relied on older data, and has ignored the recent positive trends in the Indian economy."
According to the statement, the rating agency did not take note of many of the government's recent initiatives including fertiliser subsidy reform, capping subsidies as a fraction of Gross Domestic Product (GDP) and new manufacturing and telecom policies.
With PTI inputs