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Reforms at our own pace, says Sinha

Our Bureau

NEW DELHI, Aug. 9

THE Government today struck a defiant note over the downgrading of India's sovereign rating by international rating agencies, Standard and Poor's and Moody's, with the Finance Minister, Mr Yashwant Sinha, declaring that the Government would pursue econom ic reforms ``at our own pace.''

``We will carry out the reforms agenda without being hostage to anyone,'' he said after a meeting with the Governor of the Reserve Bank of India, Dr Bimal Jalan, in the Finance Ministry.

Mr Sinha, who questioned the rationale for the downgrading of India's sovereign credit rating by Standard and Poor's and subsequently by Moody's Investors Services, said that the rating agencies were not adding to the country's wisdom by noting their con cern over the rising fiscal deficit.

``I am aware of the fiscal situation more than anyone else and I have been the biggest advocate of fiscal discipline.'' In this context, he pointed out that the Government has initiated several measures such as the introduction of the Fiscal Responsibili ty Bill and other legislations to curb excess Government spending.

These steps would take time to fructify as Parliamentary procedures have to be adhered to.

Moody's Investors Service had on Tuesday revised India's sovereign credit rating from stable to positive for foreign currency debt and from positive to negative for domestic debt. The credit rating agency had voiced concerns about the absence of a cohere nt and realistic strategy to curtail the budget deficit. It also said that the outlook had been revised mainly on account of missing an opportunity to implement second generation economic reforms.

The RBI Governor, Dr Bimal Jalan, also appeared to echo the Finance Minister's views, by saying that there was no domestic debt crisis. ``The economy was stable and good and there is no internal debt crisis brewing,'' he told newspersons after his meetin g with the Finance Minister.

Dr Jalan, who has been consistently talking of a soft interest rate bias over the past few weeks, did not foresee any need for an immediate cut in interest rates. With bond yields dropping, he reckoned that slashing interest rates was not warranted immed iately.

Mr Sinha also expressed his unhappiness about the rating agencies' decision to overlook the fact that India had managed its external sector well. ``We have a very strong external sector and what has been said about the external sector is not based on fac ts,'' he said.

In its rating statement, Moody's had said that although the current account deficit measured against the nominal GDP appeared to be small, it was no guarantee that the external debt finances were healthy.

`No fall in rupee value'

THE Finance Minister, Mr Yashwant Sinha, today scotched fears over a fall in the value of the rupee, in the wake of the lowering of the sovereign credit rating by international credit rating agencies, S & P and Moody's.

Mr Sinha told newspersons to keep the idea of a possible fall in the value of the rupee value out of their minds, considering the foreign exchange reserves of $43 billion.

The Finance Minister and senior officials of the Ministry as well as the RBI have been harping on India's strong external sector and the management of the external sector.

Picture: Finance Minister, Mr Yashwant Sinha, flanked by Dr. Mervyn King, Deputy Governor of England, and the RBI Governor, Mr Bimal Jalan, on their way to attend a lecture on `The International Financial System' in the Capital on Thursday.

Picture by Ramesh Sharma