Fitch's downgrade action is herd mentality, says Basu

"There is herd mentality among policy makers, herd mentality among corporates. There is also little bit of herding among credit rating agencies. We were pretty much expecting Fitch to do so," Basu told reporters here.

"Fitch outlook change to me is not worrying, simply because I was anticipating it. I feel most people were anticipating it," he added.

Global rating agency Fitch's action follows rival Standard and Poor's (S&P) downgrading credit outlook from 'stable' to 'negative' less than three months ago in April. S&P also warned on June 11 that India may be the first in the BRIC grouping to falter and its sovereign credit rating may slip below investment grade.

Basu said, "Even among rating agencies, there is an element of looking over your shoulders, to see what others are doing and given the statement from S&P, it was only to be expected that there would be similar kind of move on part of Fitch."

Despite the downgrade, Basu said that infact in the Fitch statement, there are a lot of positive elements regarding India.

However, Basu said, "There is lot to be done. I think that the next six months will be crucial. There are enough clues to say that there is some deep strength in the country. The country could turnaround." (MORE)