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India deserves an upgrade in sovereign rating: Chidambaram

‘Macro-economic situation is much better now’

Written by ENS Economic Bureau | New Delhi | Published: May 21, 2013 2:38:55 am

Finance minister P Chidambaram on Monday said that India deserved an upgrade in credit ratings and sovereign outlook in view of improvement in macro-economic situation.

“We deserve a ratings and outlook upgrade. There is nothing to worry as the macro-economic situation is much better now,” Chidambaram said at the sidelines of an event hosted by the Competition Commission of India (CCI).

Last week,global ratings agency Standard & Poor’s had reiterated its negative outlook on India’s long-term sovereign debt,and said that Asia’s third-largest economy had a one-in-three chance of its rating being downgraded to junk. One of the reasons it cited for this action was the ballooning current account deficit (CAD) due to high gold prices.

Commenting on the widening CAD,Chidambaram said that policymakers will do all they can to bring down gold imports. “RBI,has now,instructed banks that they should not import gold,except for jewellers for export. If necessary,more steps will be taken to curb gold imports,” he added.

He also said that there was a need to merge some of India’s banks,including some public sector entities,to streamline the banking system. “The need for two or three world-size banks in an economy that is poised to become one among the five largest in the world is rather obvious,” he said.

Chidambaram further said that while restructuring may be needed in some sectors,mergers may reduce competition in certain segments or geographies substantially and may alter competition between banks and non-banks. With PTI

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