Chidambaram said there were a lot of "other candidates in the world" whose fiscal position was worse than India's, plus India was still growing at 5.7 percent with only "four or five other countries growing at a faster pace."
"We also have healthy forex reserves at $300 billion and a high savings ratio of 32 percent of GDP … we certainly don't deserve a downgrade," he said.
When asked whether elections scheduled for 2014 could force a "populist budget" next month and lead to a pause in economic reforms, Chidambaram said: "The elections are 14 months away and budgets are not drawn keeping elections in mind. It will be a responsible budget."
Chidambaram, 67, who could be a potential prime ministerial candidate in the 2014 elections, said India would look to grow close to 8 percent from 2014 onwards.
"That is India's potential (8 percent GDP growth). ... If growth is below that it shows we are not doing something," he said.
When asked whether the Reserve Bank of India (RBI), which meets on Jan. 29, will pursue a growth agenda and cut rates, Chidambaram said, "Just as high inflation penalizes the people, lower growth also penalizes people … the ball is in the RBI's court."
The RBI has resisted pressure to cut rates aggressively and has instead focused on fighting inflation which is running above 7 percent.