New Delhi, March 17 (PTI): The worst may be over for India’s economy but uncertainty still lies ahead, and qualitative fiscal reforms are necessary to ward off any further bad news, global rating agency Fitch’s Indian arm has said.
“This is the bottom of the pit (for the Indian economy). Now whether we dig a further or deeper pit for ourselves by not implementing the fiscal reforms, or we find steps to climb up, that is where the uncertainty lies,” India Ratings managing director and CEO Atul Joshi said.
“The worst is behind us, but there is uncertainty ahead of us, which if not handled properly would result in further bad news. If handled properly and executed well, there is only good news ahead,” Joshi said.
“This is the bottom and the worst is over as of now,” he said.
Joshi, however, refused to comment on whether the risks still remain about a possible downgrade in India’s sovereign credit rating to “junk” status, or the prospects have improved for an upgrade.
“It would be inappropriate for me to comment on where it (rating for India) will go, as there is a separate sovereign team at Fitch Group to look at that aspect,” he said.
India Ratings, which was formerly known as Fitch India, is a wholly owned subsidiary of global rating major Fitch Group.
India’s credit rating was put on a “negative” outlook by various agencies, including Fitch, last year because of a slowdown in economic growth rate and lack of reforms.
A negative outlook means a potential downgrade from the current rating, which is the lowest investment grade rating BBB- in case of India.
“At present, Fitch has a BBB- rating for India with a negative outlook and the last what we said about it was that there is one in three chances of downgrade and that position remains as of now,” Joshi said.
Another rating agency Standard & Poor’s has also put India on a negative outlook, but it said the outlook could be revised to “positive” if the government implemented initiatives to reduce structural fiscal deficits, improved the investment climate and increased growth prospects.