Ahmedabad: Government Wednesday rejected the downgrading warning by rating agency Standard & Poor's and the comments made by industrialist Azim Premji on policy paralysis and exuded confidence that the economy would revert to high growth path after overcoming "difficulties and challenges".
Reacting to S&P's threat of downgrading India, Home Minister P Chidambaram said "we tend to overreact to rating agency reports. Some of these rating agencies have poor record in the past. I do not think we should take the ratings seriously."
Chidambaram said the economic challenges before the country today "is nowhere near to the challenge we faced in 1991 or the Asian (currency) crisis of 1997."
He said the UPA government has put India on the path of high growth. "We are absolutely confident that we will return to high growth path," the Home Minister added.
On Wipro Chairman Premji's comments on "lack" of governance, Chidambaram said those were his views and claimed the present UPA government was "strong and decisive".
"Azim Premji has a view... But we have a strong government, there is a Prime Minister in-charge", he added.
Stating that the government has taken several steps to rev-up the economy in a difficult situation, Chidambaram said "it is clearly a result of strong and decisive government. All this has happened because of them."
He said the government is "open to suggestions of having a stronger and decisive government".
Admitting that inflation was high in the country, Chidambaram said it was due to high international crude oil prices and the resultant effect it had on the current account deficit.
"There is an unacceptably high level of inflation. All of us know why there is high inflation. During NDA regime, crude oil prices were on an average of USD 20 per barrel. During UPA rule, there was an average of USD 80 barrel. Today, the average price is over USD 100 per barrel. It is around USD 110," Chidambaram said.
"We give subsidy of Rs 13 on diesel, Rs 31 on kerosene and roughly of Rs 400 on LPG. This is fueling a rise in prices. There are no easy solutions. We have to address the current account deficit," Chidambaram said.
Hoping that inflation will come down, he said, the Reserve Bank of India (RBI) is expected to take steps in this regard and establish a fine balance between growth and inflation.
"We can only hope that monsoon will be good and crude oil prices will be controlled... No government is happy if the prices are so high, no political government will be happy if prices rise," Chidambaram said.
He claimed the Indian economy was not contracting and has continued to grow. "We would like to grow faster but we are a growing economy."
The Minister said the fact that India continues to be a high-investment country and it is also investing in other countries are two indicators "that ours is a growing economy".
"It is a sign of India's increasing managerial skills... We are a more open economy that ever before. We are confident of going back to the growth path," he said.
He admitted there has been some pressure on current account deficit but said the Centre has maintained the flagship social sector programmes.