Tokyo: Dismissing fears of a rating downgrade, Finance Minister P Chidambaram on Thursday said the government would take a host of reform initiatives in the next two years to spur growth momentum. "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 agency and convince them that India does not deserve a downgrade," the Minister said at a press conference on the sidelines of the IMF-World Bank annual meetings in Tokyo.
Chidambaram said this while replying to a question on the possibility of downgrade of India's credit rating to junk grade by global agency Standard and Poor's in 24 months if more reforms measures were not implemented.
"They (S&P) said there is one-in-three chance over 24 months. I think 24 months is a long time. You will see lot of reforms and lot of change, and lot of strengthening of the Indian economy", he said, adding in terms of growth and potential for growth, India was way above most countries of the world.
S&P in its report on Wednesday said that there was one-in-three likelihood of rating downgrade for India within 24 months if the economic growth prospects dim, its external position deteriorates, its potential climate worsens, or fiscal reforms slow down. Replying to questions on impact of easy money policy being followed by the developed world, he said it would not only bring more money into emerging nations but also fuel commodity prices.
"There are pluses and minuses. The immediate concern is that if so much liquidity is injected into the system, it might lead to elevated prices, especially in commodities. It might lead to increased speculation in commodities, crude oil, wheat, cotton and metals," Chidambaram said. As regards the quota reforms at the International Monetary Fund (IMF), the Minister expressed hope that it would be completed by January 2013.
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