No Adverse Spin-Off: Ficci Adverse Spinoff Unlikely

Federation of Indian Chambers of Commerce & Industry has said that the impact of Moody's lowering India's foreign currency country ceiling will not have any significant adverse spin-off, since it will affect only the resource mobilisation through the debt route and not through the equity route.

Stating that India had weathered on many occassions the adverse ratings given by these agencies on one count or the other over the years, Ficci has said that it is time to send clear signals for attracting foreign equity into the country. Only a few companies, particularly those that do not have a separate analysis wing, will take seriously the ratings and decide their investment decisions.

"Large corporations having their own analysis wing will take their own investment decisions based on well-researched policy parameters. They will not get swayed by these ratings. The prognostication of the rating agencies, which proved wrong during the South East Asian meltdown, has also discounted the credibility of such ratings," the chamber has said.

The opening up of the hydrocarbon sector and the opening-up of the insurance sector should signal more foreign investors into this country who will fathom the investment opportunities, returns and the policitial stability which has been hailed by no less a person than Bill Clinton, who had recently mentioned that India will become an economic superpower in the next millennium along with Russia and China. "These moorings and conclusions are based on hard facts and do not get disjuncted by explicitly or implicitly based assessment," Ficci has said.

The chamber has further said that with the lowering of the rating, the interest rate on foreign borrowings may go up marginally. At the same time, one has to keep in mind that India's debt ratio to the GDP is at a comfortable level so also the debt servicing ratio. There is a cushion which India now can absorb especially against the backdrop of comfortable foreign exchange reserves.

According to Ficci, India's growing importance as an emerging economic super power is well recognised and appreciated. With its continental size of the market and vast reservoir of skilled manpower, it can chart out its own development course unlike the South East Asian countries which are dependent on otehrs for its development needs.