Credit rating, a wrong assessment: Sinha

By Our Special Correspondent

NEW DELHI, AUG 9. The Union Finance Minister, Mr. Yashwant Sinha, today discounted fears of the reforms process being affected by the downgrading of India's credit rating by two international agencies. ``The ratings are an absolutely wrong assessment of India's reforms process. We will continue with reforms at our own pace. We are not hostage to anyone so far as the reforms are concerned,'' he said.

On the contrary, Mr. Sinha sought to question the reliability of the ratings assigned by the agencies to sovereign nations. He said the same credit rating organisations had given high ratings to the East Asian nations just before they were struck by the meltdown, thus indicating that they were not good evaluators of a country's sovereign currency and domestic debt standings.

The Finance Minister maintained that the ratings would not lead to a fall in the value of the rupee. ``With dollars 43 billion in reserves, you don't have to bother about the rupee. Keep the idea of a possible fall in rupee value out of your mind,'' he told newsmen. ``We have a very strong external sector and anything that is being said about the external situation is not based on facts at all,'' he added.

Conceding that the growing fiscal deficit was a matter of grave concern, Mr. Sinha said by drawing attention to this aspect the credit rating agencies were not disclosing an unknown fact, because the Government was aware of the problem and had taken steps to bring it under control. ``I have been the biggest advocate of fiscal discipline myself. The Eleventh Finance Commission has created a structure through which we are now working with the State Governments so that fiscal discipline pervades in their budgets also.''

The Government had undertaken several measures, including the introduction of the Fiscal Responsibility Bill, to curb Government spending and reduce deficits, he said.

Mr. Sinha's conviction was upheld by affirmative statements of the Reserve Bank of India Governor, Mr. Bimal Jalan, and apex industry associations. The economy was not facing any domestic debt crisis, was stable and in fine fettle, said Dr. Jalan, after meeting Mr. Sinha.

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