PlanCom for rating upgrade on back of high growth expectations
Mumbai: Planning Commission Monday made out a case for India's rating upgrade by global agencies saying the economy is all set to regain momentum and improve growth rate to over 6 percent in the second half of the current fiscal.
"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)," Planning Commission Deputy Chairman Montek Singh Ahluwalia said here.
Rating agency Standard & Poor's has warned that there was one-in-three chance over 24 months for a downgrade of India's rating to junk status if government does not undertake reforms.
"I think the second half will be better. Somewhere around 6 percent is a reasonable basis to start working from. It could be a little better, it could be a little worse," he said.
The Indian economy grew at 5.5 percent in the April-June quarter. The data for July-September quarter is expected on November 30. In the 2011-12 fiscal, economic growth slumped to a nine-year low of 6.5 percent.
"It is our hope that in the second half of the year, which has begun just now, many of the measures taken by the government in the recent past to revive investor confidence will lead to a turnaround setting in in the second half," he said.
The government has taken a slew of reform initiatives in the last month like opening up multi-brand retail to foreign investment and hiking FDI cap in insurance and pension.
Basing his optimism to the pick up in the August IIP numbers as also in the recent PMI (Purchasing Managers' Index) , Ahluwalia said there are signals of an up-tick.
"We have two signals already, the industrial production index appears to have gone up a little in August and PMI is doing a little bit better.
"I am using that as a touchstone...The government is back in action. Therefore I am willing to interpret the slight up-tick in the industrial production index as an example of deceleration having been arrested. I am not actually saying that resurgence has begun, but what we have done (policy actions) the impact will be delayed," Ahluwalia said.
After languishing for many months, the factory output grew by 2.7 percent in August, against a contraction of 0.18 percent in July.