The finance ministry on Friday pitched for Indias sovereign rating upgrade at a meeting with global rating agency Fitch. The ministry highlighted the governments measures for fiscal consolidation and containing the current account deficit since the agency had threatened to downgrade Indias sovereign rating to Junk.
Fitch raised concerns on how deficits will be met and how the government will be able to meet revenue targets. We said we are confident,gold import is declining and investment in our economy is going to start increasing,said a senior finance ministry official after the meeting,which was also attended by Arvind Mayaram,secretary,department of economic affairs.
Underlining its efforts at fiscal prudence and a target of 2016-17 for reducing the fiscal deficit to 3 per cent,the finance ministry is also understood to have expressed confidence that the Current Account Deficit (CAD) will come down as oil prices are stable and the rupee has been range bound.
The Cabinet Committee on Investment has approved projects worth Rs 70,000 crore in three months time. These are infrastructure projects and will have positive impact on cement industry and steel industry, the official added.
Concerned about the high fiscal deficit and policy uncertainty,global rating agencies including Standard and Poors and Fitch had last year threatened to downgrade Indias sovereign rating to Junk,making it difficult and costlier for Indian entities to borrow funds overseas.
Fiscal deficit had touched a high of 5.8 per cent in 2011-12 while tax proposals such as those on retrospective taxation had worried investors.
S&P rates India as BBB-,lowest in the investment grade,with a negative outlook. After lowering Indias credit outlook to negative,Fitch too had in August last year said the possibility of downgrading the countrys sovereign rating is more than 50 per cent in the next 12-24 months unless reforms are carried out.
Since then,the finance ministry has taken several reforms initiatives like liberalising FDI norms for several sectors,including multi-brand retail to promote growth and investment. S&P is scheduled to visit on April 25.