The Finance Ministry plans to fire on all cylinders to convince international rating agencies – Fitch, Standard & Poor’s and Moody’s – that the Indian economy is on a strong recovery path.
Fitch will be the first to visit North Block (which houses the Finance Ministry) on April 12, followed by S&P’s on April 25 and Moody’s on May 7.
The meetings are taking place at time when Asian Development Bank (ADB) has lowered India’s growth projection for 2013-14 to six per cent from 6.5 per cent. The growth forecast is still under review by domestic rating agencies such as Crisil, which had forecast a 6.4 per cent growth rate for the current fiscal.
However, the Finance Ministry does not seem to be too perturbed by the revision. “It is in line with the Government’s estimate at a lower side.” a senior Finance Ministry official told
In the Budget, the Ministry had projected growth rate of 6.1-6.7 per cent. Now, apart from ADB, other agencies are likely to keep the growth projection around six per cent.
Talking about the meetings with rating agencies, the official said the Ministry would focus on four areas. The first is fiscal consolidation. “Strong measures have resulted in bringing fiscal deficit even lower than the revised estimate of 5.2 per cent. We are likely to close 2012-13 with a fiscal deficit between 5-5.1 per cent,” he added.
The second key point will be inflation. Although core inflation (inflation excluding very volatile components such as food and energy) has moderated, food inflation is still high.
The third important issue will be the current account deficit (CAD). “The significant thing here is that financing of CAD is without dipping into foreign exchange reserves. However, it needs to be explained that there is no short-term solution,” he said.
After touching a record 6.7 per cent in the third quarter (October-December), CAD is likely to moderate in the fourth quarter (January-March). With this, this deficit is estimated to be around five per cent for the full fiscal 2012-13. Even ADB has projected five per cent CAD.
The Finance Ministry’s fourth point will be on growth and the various reform measures.
“Riding on various reform measures, growth is picking up. We have taken steps to boost manufacturing. The Cabinet Committee on Investment is now very active in giving clearances to stalled projects,” the official said, while mentioning measures such as liberalisation of FDI, raising diesel prices and, more recently, sugar de-control.
The official clarified that the Government would not seek a revision of its rating outlook. “We will explain various aspects of India’s growth story and it is up to them to consider revising the outlook,” the official said.