NEW DELHI – The Indian economy is at the high risk of falling out of the BRIC (Brazil, Russia, India and China) nations, as the Standard and Poor’s the global credit rating agency warned India about the investment grade rating. The Standard and Poor’s report suggests that unless the government is able to handle the current situation of slow growth and economic downfalls it won’t be able to maintain an investment grade rating and so might have to fall out from among the BRIC nations.
Joydeep Mukerji, Credit Analyst, Standard and Poor, in a report titled ‘Will India be the first fallen BRIC angel?’ said, “Setbacks or reversals in India’s path towards a more liberal economy could hurt its long-term growth prospects and, therefore, its credit quality.” S&P expressed concerns on the increasing government expenses, enlarging trade deficit and political vacuum, with the direct reference of the nation’s poor quality political leadership.
Finance Minister Pranab Mukherjee rejected the S&P report and said, “Between April 2012 and now, there are no significant events to indicate that the economy’s vulnerability to shocks has increased, though growth numbers for the fourth quarter 2011-12 have come below expectations.” He also vowed that there would be turnarounds in the growth prospects and that government has completely grasped the current situation. Keki Mistry CEO and Vice Chairman of HDFC agreed to this and said, “Our domestic economy, which accounts for more than 70 per cent of total demand, remains robust. We also need to cut our fiscal deficit, or there will be a downgrade.”
