India News and Travel Times Provides India-centric and other News and Features

Chief economic adviser Kaushik Basu has said the 'herd mentality' of ratings agencies led to Fitch's revision of India's rating outlook to negative from stable. "(Just like) big corporations look at one another, and there is some amount of herd mentality, countries look at one another and when one slows down, another begins to slow down, there is some herding over there," Basu told media here. "Even rating agencies have a little bit of herding. If the big one is casting some doubts about a country, you also want to be there. You don't want to be left out, so you have to keep that in mind," he added. Earlier, Fitch Ratings cut its credit outlook for India to negative from stable, nearly two months after rival Standard & Poor's made a similar call, citing risks that India 's growth outlook could deteriorate if policymaking and governance don't improve. While stating that there should not be a state of denial about the state of the country's economy, Basu said that sections of Fitch's statement indicated that India could affect an economic turnaround, which made the report a positive one. "There are enough lines over there (in the Fitch report), saying that it is entirely possible, given the strong fundamentals of the Indian economy, that they will be able to change that over, and the Indian economy is going to turn around. So, actually Fitch is not worrying me," he added. S&P had observed that India could become the first of the so-called BRIC economies to lose its investment-grade status, less than two months after cutting its rating outlook for the country. These reports come after India posted a March quarter annual growth of 5.3 percent, its weakest pace in nine years and far below expectations.

Rating agencies doubting India story due to 'herd mentality': Kaushik Basu