India's growth story is credible, govt tells Moody's

Last week the agency had said India's sovereign outlook is stable and does not warrant any action on the country's credit rating in the next 12-18 months

The finance ministry today told global rating agency Moody’s that the country's growth story was credible and the government was taking steps to deal with fiscal issues.

“...It’s not as if the picture is fully rosy... We know there are problems but we have to take actions in a particular manner and the government is fully committed to take action, so that the problems we are seeing today are fully addressed,” Economic Affairs Secretary Arvind Mayaram told reporters after a meeting with Moody’s representatives.

Last week, Moody’s had said India’s sovereign outlook was stable and did not warrant any action on credit rating in the next 12-18 months. Moody’s wanted to learn from finance ministry officials the steps taken to check the subsidy outgo and the impact of the proposed food security Bill on the exchequer.

“We have a credible story that we have told them and they have appreciated what we have said. Now, the rest is upto them,” Mayaram said.

The secretary said the fiscal numbers and the inflation situation had improved since the last meeting with Moody’s representatives. “We raised the same points but with additional numbers. Everyday the numbers improve... The last time we had met (Moody’s) they (the numbers) have improved further. So that's a good sign.”

While India’s growth slipped to a decade’s low of five per cent in 2012-13, the government has been able to bring down the fiscal deficit to 5.2 per cent of the GDP during the period. Inflation slowed to a three-year low of 5.96 per cent in March. In January, Moody’s had reaffirmed Baa3 sovereign credit rating for India that indicates investment grade, with a stable outlook.