The Finance Ministry has pitched for rating upgrade with Standard & Poor’s.
Currently, India has a sovereign rating of ‘BBB–‘ which is the last investment grade. Last August, the rating agency revised the outlook on India's long-term credit rating to ‘negative' from ‘stable.' There was a ‘one in three' chance of a rating downgrade within the next 24 months, it had warned.
Agency officials met the Finance Ministry officials on Thursday. The Finance Ministry, led by the Economic Affairs Secretary Arvind Mayaram, gave details about various reforms measures initiated and its impact during last few months. “We are confident that there is no case of downgrade. We are on the right track,” Mayaram told reporters after more than 2 hours meeting.
The rating agency expressed concern on twin deficits- fiscal and current account, inflation and subsidy bills. However, the Secretary claimed that the Government has taken bold and hard decisions. “Petroleum subsidy is around 36 per cent in developed countries and there is no attempt there to reduce that. We are working to eliminate some of the fuel subsidy,” he added.
The Government has also approved Rs 70,000 crore worth of projects. Now investment is expected to flow in and which in turn will create demand. The newly constituted Cabinet Committee on Investment has cleared projects with investment worth $14 billion, Mayaram said.
The meeting with rating agencies started with Fitch earlier this month and now Moody’s is scheduled to meet the Finance Ministry officials during first week of May. After a month or two after these meetings, these rating agencies will announce their stand on ratings and outlook. Any lowering will take the rating to junk investment grade, making it difficult for the country to attract foreign investments or the company to borrow abroad.