'Take India off negative watch list'

It is time for global credit rating agencies to take India off the negative watch list, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today even as a leading firm last week threatened of a possible downgrade of the country within 24 months.

"I don't believe there's an iota of information that would suggest taking a negative step.

"The real issue for rating agencies, if they are reading the signals right, is whether they're going to remove the negative watch (on India)," Ahluwalia told a banking conference organised here by Yes Bank and Financial Times.

Later, when reporters asked him whether he was hinting that the rating agencies should upgrade their forecasts on the country, Ahluwalia said, "Absolutely. I'm quite certain that things are going to improve."

He further said, "If you are running a rating agency and say 'we are putting India on a negative watch', which is what they did four months ago, and you also have somebody updating India, my guess is that whoever is doing the updating will say there's a lot of good news.

"Is it good enough to upgrade India or is it good enough to remove the rating negative watch, that's the issue."

Last week, Standard & Poor's had said there was "one- in-three chance of the country's sovereign rating being junked", which will place it to non-investment grade level.

It cited high fiscal deficit driven by high subsidies, policy inactions, high current account deficit among other issues as potential causes for junking the sovereign rating.

In June, S&P had kept the country under rating watch list. The current rating given by S&P is BBB- with negative outlook.

The government has taken enough measures for everyone to see towards fiscal consolidation like cutting LPG subsidy by half and allowing foreign direct investment into many sectors, Ahluwalia observed.

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