“From a rating perspective, policies are more important than personalities”, said Thomas Rookmaaker, Director in Fitch’s Asia-Pacific Sovereigns Group.
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This, he said, implied support for such policies beyond the governor in RBI and government.
The positives which Fitch finds in India are a stable outlook, strong medium-term growth prospect and favourable external finances, but felt these were balanced out by high government debt, weak structurals and a hard but improving business environment.
Indian rupee weakened against the USA dollar in early trade on Monday, as worries escalated on possible dollar outflows after Reserve Bank of India (RBI) governor Raghuram Rajan announced his exit from the central bank over the weekend.
Stocks and currency markets opened weak this morning – the first trading session after Rajan’s announcement – but hectic buying by some institutional investors and intervention by the RBI helped recoup the losses in equity markets and the rupee value, respectively.
A Reuters article says that Rajan was disgruntled by the selection committee that was set up last week to pick potential candidates for the Governor’s job.
Fitch also said the new Reserve Bank of India Governor would inherit a good opportunity to continue pursuing a policy of relatively low consumer price inflation and of strengthening banks’ balance sheets.
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Mr. Rajan, who became Reserve Bank of India governor in September 2013, has overseen a drop in inflation, and speedier economic growth, as India has become the world’s fastest-growing large economy. “It will survive any Governor, it is bigger than any Governor”, Rajan himself said recently.
