FinMin officials meet Fitch, make case for ratings upgrade

Officials cited improvement in macroeconomic conditions and the government's commitment to fiscal consolidation

Officials from the finance ministry met the representatives of Fitch Ratings on Tuesday and pitched for a ratings upgrade for India, citing improvement in macroeconomic conditions and the government’s commitment to fiscal consolidation.

“We have highlighted the overall economic situation, the challenges the economy faces, and the outlook for the next year,” Economic Affairs Secretary Shaktikanta Das told reporters after a two-hour long meeting with the representatives of the global ratings agency in the finance ministry.

Fitch Ratings had affirmed India’s ‘BBB-’ rating in December 2015 with a ‘stable’ outlook, and forecast eight per cent growth for 2016-17. ‘BBB-’ is the lowest investment grade, which is only a notch above junk grading.

Among the other two big global ratings agencies, Standard & Poor’s has ‘BBB-’ rating with a ‘stable’ outlook, while Moody’s has a ‘Baa3’ rating with a ‘positive’ outlook.

Representatives from these agencies are expected to meet finance ministry officials soon, as happens in the months following the Union Budget.

On Tuesday, Chief Economic Advisor Arvind Subramanian said the government had pitched for a ratings upgrade with Fitch, stating the finance ministry is committed to fiscal consolidation path.

Asked about its views on India, Fitch Ratings Primary Analyst Thomas Rookmaaker said: “We are now in the process of our review. It is going to take some time.”

The meeting comes days after official data showed the economy expanded 7.6 per cent in 2015-16 and by 7.9 per cent in the January-March 2016 quarter.

The government expects the economy to grow 7-7.75 per cent in the current financial year.

During the meeting, finance ministry officials also highlighted the reform initiatives of the government such as the new Bankruptcy Code, creation of interest rate setting monetary policy committee and amendments to the Debt Recovery Tribunal and Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) Acts.

To reset the fiscal goalpost in the long run, the government has set up a committee to review the long-term fiscal target, the Fitch representatives were informed.

The ministry officials also reiterated the government’s commitment to introducing the goods and services tax at the earliest.

Last month, Das had told Business Standard that India has a strong case for ratings upgrade from the agencies. “We feel very strongly that India’s ratings deserve to be upgraded, based on facts and circumstances,” he had said.