Distinct possibility of credit rating downgrade: Swaminathan Aiyar

NEW DELHI: Stating that India's image as an investment destination is not good, Swaminathan S Anklesaria Aiyar, Consulting Editor with Economic Times said that there is a distinct possibility of a credit rating downgrade.

Asked whether the political deadlock will further dent India's image globally, Aiyar said that the country is living up to its image and that it won't be dented further. He cited the case of no international oil major being ready to invest in India to substantiate his view on global perception about India.

Aiyar was of the opinion that a credit ratings downgrade or a stock market crash will not bother a government that might feel its term period is limited. While he agreed that India has its set of political and structural problems, Aiyar said that FII money was pouring into the markets despite all the issues.

Aiyar feels that the government will not focus on bringing about economic reforms because they are currently in a 'damage control' mode. The Finance Minister P Chidambaram will focus on bringing down the fiscal deficit through the process of disinvestment rather than major reforms, Aiyar said.

Calling the Parliament deadlock 'outrageous', Aiyar said that he does not see the situation improving in this session. "BJP wants to drive home the point that the goverment is corrupt," he said. "The chances of the deadlock endig are very slim," he added.

With the Left front not ready for early elections, Aiyar did not rule out the possibility of the government continuing to be in power till 2014. Commenting on the demand for scraping of coal block allocations, Aiyar said that the government was well within its power to be able to do so.