The Finance Ministry has conveyed to the international rating agency Moody’s that India’s growth story is credible, while admitting that are some problems that need to be tackled.
“We have a credible story, that we have told them and they have appreciated what we have said. Now, the rest is up to them,” Economic Affairs Secretary Arvind Mayaram told reporters after a meeting with the agency.
With this, the Ministry has completed its meetings with the three leading rating agencies, Fitch, S&P and Moody’s.
Last week, Moody’s had said that India’s sovereign outlook was stable and did not warrant any action on the country’s credit rating in the next 12 to 18 months.
During Tuesday’s meeting, Moody’s representatives, however, raised concerns over the impact of the subsidy outgo for the Food Security Bill on the overall subsidy outgo, besides targets of growth and fiscal deficit.
The Ministry told them that the Budget targets had been carefully prepared and there was no question of these not being credible.
“It is not as if the picture is fully rosy. All we said is that we know there are problems, but we have to take action in a particular manner. The Government is fully committed to take action so that the problems that we are seeing today are fully addressed,” Mayaram said.
He said the fiscal numbers as well as the inflation situation had improved since the last meeting with Moody’s representatives.
“We raised the same points but with additional numbers. Every day the numbers improve. The last time we had met (Moody’s) they (the numbers) have improved further. So that’s a good sign,” he added.
Last year, Fitch and S&P’s lowered the outlook to ‘negative’ from ‘stable’ while maintaining the sovereign rating as ‘BBB (minus).’ This is the last investment rating.
In January, Moody’s had reaffirmed ‘Baa3’ (which is equivalent to BBB minus) sovereign credit rating for India that indicates investment grade but with a stable outlook.
It may be recalled that the Finance Ministry pitched for a rating upgrade in its meeting with Fitch and S&P’s last month. Fitch has not indicated anything yet, while only last week S&P ruled out the possibility of a sovereign rating upgrade for India, citing its ‘negative’ outlook.