There has been a crisis of confidence in rating agencies across the world after all the top rating agencies failed to predict the South East Asian crisis. Lenders do not take decisions only on the basis of rating figures, the officials said. "Credit rating is only one input in the decision-making matrix, hence the importance of rating must not be overemphasised," they underscored.

The officials said that it was too early to react to the US announcement of sanctions against India. "Right now we do not know what the US sanctions actually mean", they said. It is difficult to assess to what extent India's access to external funding will be closed as a result of the sanctions, the ministry said.

"We do not understand how any erosion has taken place with regard to our external financial position asa result of the sanctions," one official said.None of our figures have taken a knock, fiscal deficit is under control, current account deficit is also under control, the official said. "Slack export growth is a source of worry, steps are being taken to push exports, poor export growth cannot be enough to change the rating outlook on a country," he remarked.

Multilateral agencies as IFC, ADB and the World Bank do not go by the rating, hence multilateral aid is unlikely to be affected by change of outlook, the official said. Bilateral agencies which provide soft loans to the government are also not driven by the rating figures, he said.

Foreign direct investment is also not affected by rating. What is marginally affected by change of rating are external commercial borrowings, the officials said.

"We have to see to what extent the private sector expresses unwillingness to respond to incentives to invest in India. The rating agency could have waited for the Budget to make up its mind. May be after a fewmonths the outlook will be upgraded," the officials said.

The quantum of ECBs was not high in 1997-98 when a number of corporates after taking approval from the government did not approach the international market. The figure is not expected to be too high in the current year as well as the rupee has been gradually falling which has taken away the attractiveness of borrowing abroad, the officials said. In addition, interest rates domestically have been falling which have taken away the attraction of locking into a lower rate abroad.