The Union government’s chief economic adviser, Kaushik Basu, on Thursday said India's credit rating could rise relatively after the recent US sovereign rating downgrade, as India may attract investments if the domestic economy continues to strengthen.
Last week, global rating agency Standard and Poor’s (S&P) downgraded US sovereign debt rating to ‘AA+’ from ‘AAA’, citing political instability and uncertainty over the proposed fiscal consolidation map.
“It is a bit of a global worry, but even before the ratings event, a lot of it was priced into the market. What S&P declared on Friday evening, we all knew for quite some time and it is not really additional information but to the extent that the signal matters,” he said.
Adding: “In the medium term to long term, India’s prospects are really unaffected by this incident. If we can strengthen our economy, we could provide some safe haven which the global capital flow is bound to look for.”
He said it was not easy to meet the fiscal targets but emphasised that the government was serious about these. Finance minister Pranab Mukherjee had pegged a target of Rs 3.43 lakh crore on net borrowing and 4.6 per cent ratio of the fiscal deficit to gross domestic product in Union Budget 2011-12.
“There may be other changes in many of our aims and objectives, especially depending on global commodity prices. But on three most important targets, the fiscal deficit, revenue deficit and borrowing, we are trying our best to keep the consolidation on track,” he said.
Gross government borrowing will be as planned, without crowding out the market for private sector borrowers. So far, the government has completed 41 per cent of its gross borrowing target of Rs 4.17 lakh crore.
