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| High fiscal deficit unlikely to affect India's ratings: FinMin |
| BS Reporter / New Delhi Jul 17, 2009, 00:30 IST |
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 The finance ministry does not expect downgrading of India’s creditworthiness rating, even as the country faces a 16-year-high fiscal deficit of 6.8 per cent in 2009-10.
“I do not expect a downgrading. If we do not act on the demand side now then we will face greater difficulties later,” said K P Krishnan, joint secretary, Department of Economic Affairs, at the sidelines of a seminar organised by the Confederation of Indian Industry.
The ministry is planning to hold meetings with all credit rating agencies in August to discuss the fiscal situation of the country.
The statement comes in the backdrop of the finance minister voicing concerns regarding possibility of downgrading of India’s credit worthiness by international rating agencies like Standard and Poor’s, Moody’s and others.
Moreover, on the issue of setting up of a separate exchange for small and medium enterprises (SMEs) as an alternative source of capital, Krishnan said: “The government has a very agnostic approach towards the viability of a separate SME exchange and doubts still prevail regarding the depth of finances needed for sustenance of such a trading forum.”
Currently, companies having issue size of at least Rs 3 crore are allowed to list on the stock exchanges and Sebi is working on regulatory guidelines with respect to listing, disclosure and de listing norms norms.
Even as questions regarding the viability of a separate exchange for SME were raised, Micro Small and Medium Enterprises (MSME) Secretary Dinesh Rai said that an exchange designed for the needs of Indian SMEs will pave the path for raising risk capital.
“There are many difficulties for SMEs in accessing the capital markets for raising funds. These include high cost of raising capital and high compliance cost. The SMEs, therefore, need to be provided a framework that would enable them to raise capital quickly and at a low cost,” he said, adding a transparent SME exchange could create a huge market for the SMEs.
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