ICRA cautious about rating updates on India

Kolkata, April 26 (IANS) Credit rating company ICRA Thursday said it is cautious on rating updates on Indian economy and companies but would not give a "panic reaction".

"We are certainly cautious about ratings because there are certain issues in the market which are adverse. During the last one or two years, the downgrades have been much more than upgrades. Now that was a trend," ICRA Group Chief Executive P.K. Choudhury told reporters on the sidelines of a programme organised by the Institute of Company Secretaries of India here.

"The ratings agencies are very cautions and careful on the rating updates... that does not mean that there will be panic reaction from us," Choudhury said a day after Standard & Poor's lowered its outlook to negative from stable on India's long-term sovereign ratings and also on major firms due to worsening fiscal numbers.

Rival rating agency Moody's Wednesday said the outlook on India's ratings is stable. It said the relatively strong GDP growth is likely to remain a credit strength over the medium term.

ICRA said it believed its ratings on Indian companies this year would "stabilise more".

"We think the ratings will stabilise more. Because, already in the last year the downgrades had taken place. Now the inherent protective factors of those companies are relatively stronger this year... The trend of downgrade will be still there, but it may not be as frequent and as severe (as before)," Choudhury said.

He projected the country's GDP growth rate at 7 percent to 7.2 percent this fiscal.

"Indian economy has a very strong resilience power. If you look at the past, from that situation the current account deficit and fiscal deficit today have been in a much better position," he said.

However, "the fiscal deficit movement is a big challenge for the government at this point of time."