India displaying delayed effects of anti-inflation policies: Fitch

According to Global rating agency Fitch, India, China and Korea — three most powerful emerging Asian economies — are exhibiting delayed effects of tight monetary policies introduced in 2010-11 to tackle inflation.

According to Fitch:

  • Slow upgrading in financial position of countries including India and China has come in the way of positive credit rating drive in rising Asia.
  • India’s WPI inflation was 7.55% and the Consumer Price Index (CPI) inflation for was 10.36% for May 2012
  • B/w March 2010 and October 2011 RBI had slashed repo rates 13 times to battle against inflation
  • India’s GDP plunged to nine-year low of 5.3% for the three months ended March 2012
  • The overall growth for 2011-12 stood at 6.5%
  • China has a negative outlook on but it is positive for Korea

Positive rating momentum in emerging Asia has come to a standstill amid lethargic improvement in sovereign balance sheets and for a few countries, concerns over high and rising leverage in the private sector
Fitch had downgraded GDP growth projections to 6.5% in 2012-13, reduced from a previous projection of 7.5%. It has already downgraded India’s credit outlook to negative and attributed it to corruption and lack of reforms.

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