A case for higher rating

This refers to India being rated BBB- and its potential for improving fiscal credibility, though with certain caveats that justify the rating. Fitch’s ratings range from AAA to BBB within the investment grade category, with BBB- being the lowest investment grade rating, just one notch above junk status, currently assigned to India. The primary reasons for this rating include high fiscal deficits, a high interest-to-revenue ratio, and elevated debt levels.

While economic factors are just one component among others, such as political stability, external factors, fiscal health, and monetary policy, India’s economic performance is moderately rated based on a weighted average approach. Additionally, India’s ability to address fiscal challenges has been acknowledged, as demonstrated by the central bank’s dividend to the government. A recent survey ranked India’s RBI Governor as the top central bank governor globally.

India arguably deserves a higher rating than BBB-, which represents the lowest level within the investment grade category.

Srinivasan Velamur

Chennai

Scaling up EV sector

This refers to ‘India’s EV market to reach ₹20-lakh cr by 2030, create 5 crore jobs: Gadkari’ (September 11). With incentivised encouragement and other proactive policy measures of the government for the EV sector and battery manufacturing units, it is quite possible to scale up the number of EVs from the current 6.5 per cent to the targeted 30 per cent of total vehicles sales by 2030. However, it is important that EV charging and battery swapping stations are also established commensurately. Ideally, for every 20 vehicles, one charging station is required. At present, there is one charging station for every 125-135 EVs in the country. The private sector should be encouraged not only through enhanced incentives for speeding up the establishment of charging stations, but also to go for alternative renewable sources of energy.

Kosaraju Chandramouli

Hyderabad

Deposit mobilisation

This refers to ‘Banking system may face liquidity challenges: FICCI-IBA survey’ (September 11). Even though the banking sector is confident that the gross non-performing asset will not rise beyond 3 per cent of gross advances, banks must not be complacent in ensuring discipline and proper governance in credit delivery, monitoring and follow-up.

CASA (current and savings) deposits are preferred by business entities and wage earners, but not for parking sizeable amounts of money. Given the paramount need of the banking system for deposits to satisfy the surging demand for credit, banks have to be aggressive in mobilising deposits, especially low-cost ones.

As deposit mobilisation is a highly competitive area, banks must not allow deterioration in the quality of their services to customers, and ensure their digital infrastructure is upgraded.

VSK Pillai

Changanacherry, Kerala