India today exuded confidence that credit rating agency Standard & Poor’s decision to downgrade the sovereign rating of the US would not have any adverse impact on the country.
After issuing an initial statement earlier in the day that the situation was ‘grave’, the government assured investors that India’s growth story was intact and the country would achieve high growth despite weak global sentiments. “We will have to analyse the situation. It will require some time… The situation is grave and there is no gain in making off-the-cuff remarks,” Finance Minister Pranab Mukherjee told reporters hours after the S&P report was out.
But, at an industry function in the evening, Mukherjee said Indian markets had the capacity to withstand the negative sentiments affecting the external world and there was no need to press the panic button.
“These sentiments in the developed nations affected our markets on last Friday. But we witnessed some recovery already and this is testimony to our capacity for resilience. Our growth story is intact and the fundamentals are strong,” Mukherjee said at an event by the Confederation of Indian Industry. Chief Economic Advisor Kaushik Basu said while the US economy was very strong, rating downgrade like this were a wake-up call and India should focus on sustaining its growth.
After indices across the world slumped over two per cent on Friday on concerns of a double-dip recession in the US and debt crisis in the Euro zone, the S&P on Saturday downgraded the sovereign rating of the US government from AAA to AA+, raising concerns that investors would lose confidence in the US economy.
The Indian government appeared to be in a panic control mode after the 50-stock Nifty index lost 120.55 points or 2.26 per cent to close at 5,211. It had tanked 215 points during the day, but recovered following statements from the government assuring this was a temporary blip and the Indian economy was doing well.
“Fundamentals (of the economy) are very strong and our markets will be able to overcome this panic reaction. I am sure the investors will find merit in investing in our markets and the markets will soon recover,” assured Economic Affairs Secretary R Gopalan.
The assurances from the finance ministry continued on Saturday. The finance ministry did not seem to be in a hurry to take any measures to protect India from the US crisis, but the government functionaries added Europe was a bigger concern than the US.
The finance minister said India had taken several measures to make markets attractive, robust and vibrant and would continue to do so making it an attractive investment destination for foreign capital. As global investors look for opportunities across the world, India’s attraction as an investment destination would continue to grow, he added.
