India deserves upgrade in sovereign rating: Chidambaram

India deserves a rating upgrade in view of improvement in macro-economic situation, the conservative outlook of Standard & Poor's notwithstanding, Finance Minister P Chidambaram said.

"Our case is that we deserve an upgrade both on the outlook and the rating. S&P may not have been convinced about that...," he told reporters on the sidelines of the Annual Day function of the Competition Commission of India.

On Friday, global credit rating agency S&P had warned that it may downgrade India's sovereign rating to junk grade if the government fails to pursue reforms and check deterioration in fiscal and current account deficits.

While retaining India's sovereign rating at 'BBB-' with a negative outlook citing high fiscal and current account deficits, S&P said there is at least a one-in-three likelihood of a downgrade within the next 12 months.

"There is nothing to worry. Our macro-economic position today is much better than what it was in August 2012," Chidambaram said, adding that the Indian economy was entering a new phase of strong growth.

India's economic growth which has slowed to a decade low of 5 per cent in 2012-13 is now projected to increase to 6.5 per cent in the current fiscal following a slew of steps taken by the government and fall in global commodity prices.

S&P's 'BBB-' is lowest investment grade and a downgrade would mean pushing the country's sovereign rating to junk status, making overseas borrowings by corporates costlier.

Since assuming office in August last year, Chidambaram has been taking a number of steps to put the economy back on track, through increased investments and cut fiscal deficit.

While the fiscal deficit in 2012-13 has been contained below the budgeted 5.2 per cent, the government proposes to further lower it to 4.8 per cent in the current fiscal.