Moody's had downgraded the country's sovereign rating on June 18 to the speculative grade. While the long-term foreign currency rating was lowered to Ba3 from Ba1, the short-term foreign currency rating was downgraded from Prime-3 to Not-Prime. Rutherfurd ruled out any revision in India rating in the immediate future.

He was, however, quick to add that Moody's decision to pick up a minority stake in Icra should not be interpreted as a statement on the state of the Indian economy. "We do not associate our rating and commercial activities. Our rating of the government of India isindependent of our commercial relationship with Icra," he said.

Extracts from the interview:

On Moody's decision to pick up a stake in an Indian entity after downgrading the country's sovereign rating

Moody's does not associate its ratings and commercial activities. We attempt to give ratings independent of any commercial relationship. Moody's is positive on the long-term future of India and developing countries in general. We want to have a more active presence in developing countries. We are not market timers. We're doing this because it builds a good foundation for the next century.

On the investment decision in Icra at a time when the Indian economy is going through a rough patch

Everyone is mystified by the timing of this investment... We always maintain a Chinese wall between rating (of a country) and commercial decisions (taken in that country). Commercially, we are not concerned about our prospects in India. If we had concerns, we would not have been here...

On thedecision to have an equity stake when Moody's could have gone for a technical tie-up

This investment is a business decision. Our stake in Icra is not a fixed income position but an equity stake. The equity stake will fetch us dividends and lead to an appreciation in the value of shares which would be important. A holder of debt security will be promised only a fixed return on his investment. We believe Icra will grow with the Indian economy and our investment will in turn grow in value.

On its reported talks with Credit Analysis & Research Ltd for a possible equity tie-up

We have met many rating agencies. CARE could be one of them. At the moment, we have no intentions of picking up any stake in CARE.

On its business relationship with Icra

We would work towards making the technical assistance agreement that we have with Icra a success. We would also assist Icra in its capital requirements and will also look at what existing shareholders want. We will not have any representation onthe Icra board. If Icra invites, our representatives will attend the board meetings.

On his outlook on India in the medium and long term

In the medium and long term, India will do well and grow. The world is recovering from the shocks in south-east Asia and they had their impact on India as they did in other countries. India is currently in the process of dealing with difficulties as so many other parts of the world.

On Moody's new business strategy and whether it wants to replicate the Standard & Poor's example of picking up stakes in many rating agencies overseas

This is only our second joint venture, the first being a minority stake in Korea Investor Service, a domestic rating agency in South Korea. We are trying to be commercially more active at Moody's, but we are not trying to replicate S&P's expansion strategy in any way.

On its strategy for growth in India

We do not have a readymade growth pattern. I personally believe in organic growth pattern -- like plant grows atthe direction of the sun light. We have to be adaptive in thinking about strategy...

For instance, if we think there will be growth in one type of security, we try to bring in staff from other departments to immediately get working on it. We do not have any grand plans. The capital markets are changing all the time and it is important to get in front of what is big.