Prime Minister's key economic advisor has said that there is no case for lowering India's credit rating and the global agencies need to look at the international scenario before taking any rating action.
"The rating agencies also need to recognise the fact that we have taken some strong actions in the recent period... therefore I believe the rating agencies do not have a strong basis for reducing the rating of India," Prime Minister's Economic Advisory Council (PMEAC) chairman C Rangarajan said.
"The rating agencies need to judge the performance of India's economy in context of what is happening in whole world ... I believe the attitude of rating agencies will undergo a change," Rangarajan added.
Credit rating agencies like Standard & Poor's have threatened to lower India's credit rating in 24 months to 'junk' grade, if it failed to carry out requisite economic reforms.
Besides, the rating agencies have lowered the growth projections for the current fiscal and reduced the outlook to negative.
Even the Reserve Bank has cut its growth outlook for the current fiscal to 5.8 per cent, from the earlier projection of 6.5 per cent in view of worsening global economy and poor investment and subdued demand.
Admitting fiscal deficit remains a problem, Rangarajan said: "India is one of the few countries which have been able to reduce the fiscal deficit from a very high level from it was few years ago."
Although the government had pegged fiscal deficit for the current financial year at 5.1 per cent in the budget, it is now targeting to rein in fiscal deficit to around 5.3 per cent of GDP.
In the past few weeks, the government has taken a slew of reform measures, including opening up the retail, insurance, pension, information and broadcasting sector to foreign investment.
The S&P agency in its report on October 10 had said that there was one-in-three likelihood of rating downgrade for India if "the country's economic growth prospects dim, its external position deteriorates, its potential climate worsens, or fiscal reforms slow".
Rangarajan, however, admitted that what the rating agency say do count and it has an impact of cost of raising funds by Indian companies and borrowers, adding, "we need to convince rating agencies that India is a good destination for investment."