Fitch repeats rating threat; FinMin says 'nothing to worry'

The Finance Ministry, however, played down the issue, saying Government is on the right direction on fiscal front.

"Back in the middle of June, we had placed negative outlook on India's sovereign rating, which currently stands at BBB-. The negative outlook suggests that there is a ... Likely chance of revising the rating downward from BBB- in the 12-24 months," Fitch said in a conference call from Tokyo.

The Finance Ministry said it is moving on the right track and is confident of restricting fiscal deficit to 5.3 per cent of GDP this fiscal.

"We are not worried. We have been saying we are on the right track. But people still distrust us and ask whether we will able to achieve fiscal deficit target ... We will adhere to fiscal consolidation roadmap," Economic Affairs Secretary Arvind Mayaram told PTI in Delhi.

He pointed out that the Government has taken a number of steps to restrict the gap between expenditure and revenue collection to 5.3 per cent of GDP during FY13, and added the process would continue in the subsequent years as well.

Fitch is the second global agency to reiterate its warning to junk the sovereign rating after its larger peer S&P, which in April and June, had warned of further downgrades which would put India into junk status from the current lowest investment grade rating of BBB-. But another agency Moody's has a stable outlook for the Asia's third largest economy.

Fitch also expressed its concerns over the country's economic and fiscal outlook.

"The negative outlook indicates concerns about the deterioration in the economic and fiscal outlook, particularly about the short slowdown in growth, persistent inflationary pressure and weak public finances," Fitch sovereign rating analyst Art Woo told a conference.

While the Indian economy has been expanding at the slowest pace in the past one decade, inflationary pressure still persists with wholesale price-based inflation hovering at 7.24 per cent in November. (more)