The government has outlined the strong fundamentals of the economy and said it was committed to rein in fiscal deficit within the target of 5.3% of gross domestic product.
Finance ministry officials, who met representatives of global ratings agency Moody’s, also discussed the challenges facing the economy and the measures taken to overcome these obstacles. “We discussed inflation, deficit, CAD (current account deficit), stressed banking system,” economic affairs secretary Arvind Mayaram told reporters. “Why would we ask anything? We just told them our story, that’s for them to decide,” Mayaram said when asked whether the government had sought a ratings upgrade.
The government is battling hard to avert a ratings downgrade and has taken a series of measures to demonstrate its commitment to economic reforms. The meeting comes a day after another ratings agency Fitch cautioned that that a loosening in fiscal policy ahead of the 2014 elections could further weaken India's public finances and put pressure on ratings.
It also warned that policy slippage or mounting evidence of a structural decline in the trend growth rate, such as protracted weak economic data, could cause the ratings to be downgraded.
Last week, Moody’s had said that its outlook on India’s Baa3 ratings remained stable due to the assumption that the country’s high savings rate and relatively competitive private sector would help lift growth which in turn would help restore the health of public finances. Standard & Poor’s and Fitch have a negative outlook on their ratings on India.
Finance ministry officials said the government would do everything to stick to the 5.3% fiscal deficit target despite the challenges.
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