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No reason for rating agencies to put India in junk category-Rangarajan

New Delhi, Nov 4 () : Rangarajan C, Advisor to Prime Minister on economic affairs says that there exists no reason for rating agencies to rate India as junk from negative status.

This comes soon after Finance Minister P Chidambaram told the Cabinet that until Rs 7500 cr project was cleared and sent signals that there is no policy paralysis. Only such steps would create a climate of investment internally and externally. PC said that such steps not taken immediately would lead rating agencies to push India to junk status which would stop investors coming in.

Rangarajan feels that looking at India from a global viewpoint, the nation has pushed in reforms in retail, pension, insurance and media. The fiscal deficit unlike other countries has been brought down, he pointed out.

The RBI put fiscal deficit at 6.2% while FM’s plan is to bring it down to 5.3% from the earlier 5.1% target. Standard and Poor had warned in a communication on Oct 10 that if fiscal reforms and its external position weakens, then it would rate India under junk status.

Rangarajan admitted that ratings do affect the country’s image but added that FM should prevail upon the agencies and convince them about the measures taken.

Montek Singh Ahluwalia ,Economist and Deputy Chairman, Planning Commission said that coal, cement and petroleum refinery along with four core sectors showed growth in September. He pointed out that the economic growth hit a low of 5.3 % last year but this time it has picked up to 5.5 %.

The supply of coal and fuel to power plants are now addressed and by end of this year it would be sorted out. He felt that measures taken by FM now would yield results only by January. He however also put the blame on officials who are more cautious than the decision makers and who delay sanction by sitting on files.