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Tuesday, Apr 06, 2004

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S&P lauds overall economic growth; worried at deficit

Our Bureau

New Delhi , April 5

STANDARD and Poor's (S&P), the credit rating company, on Monday lauded the country's overall economic growth and external sector performance, even while expressing concern over the finances of the Centre and State Governments.

The agency's Managing Director, Mr Paul A. Coughlin, told newspersons after a meeting with senior Finance Ministry officials that in "terms of growth (and) external sector, it is clearly a very positive story".

This was more so in the context of the economy registering a 10.4 per cent growth in the third quarter of 2003-04 and the official foreign exchange reserves crossing the $110-billion mark.

But he also said that the story was not so positive on the fiscal front.

"We are most concerned about the size of the fiscal deficit, both at the Central and State Government levels, and (also) the loss-making electricity sector."

Mr Coughlin emphasised that the key to sustain the current growth momentum was "fiscal consolidation".

The combined fiscal deficit of the Centre and States currently exceeds 10 per cent of the country's GDP.

Mr Coughlin said that purpose of today's meeting was "to get a sense of the policy and political environment" in the country.

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