S&P rating: Govt says economy is on right track

NEW DELHI: Expressing disappointment over S&P's rating action, the government today said its fiscal policies are on the right track and there is nothing to be worried about.

Standard & Poor's (S&P) has warned that it may downgrade India's sovereign rating to junk grade if the government fails to pursue reforms and check deterioration in fiscal and CAD.

"I dont think there is a great deal of concern that one should put on this. I think we are on right track and the reform process will continue and therefore I don't think there is anything to be worried about," Economic Affairs Secretary Arvind Mayaram said while commenting on the S&P report.

The Secretary, however said government would have been "happy" had S&P upgraded the sovereign rating.

Meanwhile, Chief Economic Adviser Raghuram Rajan said it is "disappointing" that S&P has not seen it fit to improve its outlook for India, especially when the agency acknowledges the important steps taken by the Government in recent months.

"International institutional investors, who have invested over USD 17 billion into India so far this year, do seem to have a different view. The Government will continue to do what is necessary to keep India on a stable, sustainable, and strengthening growth path," he said.

He further said the government's "job is not to cater to the rating agencies", but to change the ground realities on which it is focused.

On S&P's concern over stalling of economic bills in Parliament, Mayaram said reforms are also done through executive decisions.

"There is a always a executive space for reforms and government is moving....I think its very narrow way of looking (at) reforms," he said, adding the rating action "does not come as too much of a surprise".

Last month during a meeting with S&P representatives, Finance Ministry officials had pitched for a ratings upgrade arguing that the government had been taking steps to contain fiscal deficit and promote investments.