Rating downgrade not to have major impact on India: Roubini Economics

NEW DELHI/LONDON: Not ruling out the possibility of a credit ratings downgrade, Arnab Das, MD, Roubini Economics told ET Now that there is danger of India's economic growth slipping below 5%. "A ratings downgrade may assist in pulling growth to sub 5 levels," Das said.

However, Das feels that a ratings downgrade will not have a major impact on India. "It will just be a reconfirmation that here are structural problems in India," Das said. Emphasising the need for reforms, Das said that structural issues will continue to constrain growth in BRICS, including India.

Asked about the likelihood of a third round of quantitative easing by the US Federal Reserve, Das said that the American growth has been 'very anaemic'. With a weak labour market and persistent risks from Eurozone, Das is of the opinion that a QE3 will happen sooner or later.

The announcement of QE3 will help the Indian economy, he opines. With easy money coming in from the Federal Reserve and improvement in Eurozone dynamics, global investors will be willing to take more risks, Das said.

Global oil prices are to a major extent affected by political risks and with the uncertain economic environment, risky assets will continue to be volatile, he added.