Govt to press for better rating outlook

Riding on reform wave, FinMin to push India's case with rating agencies in Tokyo next week

With various reform measures in the two weeks after the Trinamool Congress’ exit taking the sting out of the “policy paralysis” criticism, and the fiscal deficit situation looking better, the finance ministry has stepped up efforts to persuade international rating agencies to assign a better outlook for India.

Arvind Mayaram, the economic affairs secretary, met the representatives of Fitch Ratings on Friday; he is leading the initiative. The efforts are to continue in Tokyo next week, said a senior finance ministry official, at the annual meetings of the International Monetary Fund and the World Bank on October 10-15. “One-to-one meetings are slated to take place with the rating agencies to explain the implications of steps taken in India,” said an official.

Finance Minister P Chidambaram is also going to Tokyo for the meeting. His presence is expected to boost the government’s efforts to present an improved outlook for growth and the fiscal situation before the rating agencies.

In the backdrop of a policy paralysis perception and apprehensions of the fiscal deficit crossing the Budget target of 5.1 per cent of gross domestic product, by one percentage point, rating agencies had put the country under an investment scenario downgrade. But with a diesel price rise, capping of subsidised cooking gas cylinder sales and announcement of foreign direct investment reforms in multi-brand retailing, insurance and pensions, along with steps to boost the stock markets, the scenario has changed over the past fortnight.

Chidambaram, Mayaram and other finance ministry officials will be in Mumbai tomorrow and are likely to announce more measures to attract foreign investments. The minister is to address the board meeting of the Securities and Exchange Board of India and will meet representatives of foreign institutional investors and mutual funds. Reserve Bank of India Governor D Subbarao also has a meeting scheduled with Chidambaram.

Meanwhile, a meeting was held on Friday to clear the Budget proposal on allowing external commercial borrowing for the affordable housing sector.