NEW DELHI: Rating agencies should upgrade their stance on India’s credit outlook, said Arvind Subramanian, Chief Economic Advisor. “Now we have a 50 basis points rate cut and I think that is good for the economy and all rate cut benefits...If the outlook is looking good, the rating agencies should draw their lesson from that on improving the outlook,” he said.
Ruling out any immediate upgrade, agencies have warned against slippages due to disinvestment and even red-flagged the country’s delayed fiscal consolidation roadmap. According to Subramanian, the rate cut was consistent with the government’s Economic Survey and thereafter in the Union Budget for the outlook on inflation and for the outlook on overall economy. “It (rate cut) shows that RBI and government are on the same page in terms of how we view the economy. It also means that Budget can be seen as conducive to non-inflationary growth,” he added.
Meanwhile, the repo rate cut will boost demand and growth, said Shaktikanta Das, Revenue Secretary. “It augurs well for Indian business, Indian industry, for common citizens who want to take housing loans and other kinds of loans,” he said adding that the government did its bit and the RBI responded immediately.