India on Thursday pitched for a rating upgrade by global agency Fitch saying that the country's growth prospects have improved on account of recent reform measures as well as lower oil prices, and its fiscal consolidation programme is on track.
In their meeting with Fitch representatives, senior Finance Ministry officials highlighted various initiatives announced in the Budget 2015-16 which are expected to boost investment and growth. The officials highlighted the government's commitment to stick to targets set for the fiscal as well as the current account deficits.
Talking to reporters after the meeting, a senior Finance Ministry official said the government representatives also talked about declining inflation as a big positive for the economy. "India is on the path of fiscal consolidation and budget paved way for increased investment. We have made a case for ratings upgrade.
There is no reason why rating agencies should not look at upgrading India," the official said. Global rating agencies Fitch, S&P and Moody's have assigned lowest investment grade rating to India, although with a stable outlook.
After the presentation of Budget on February 28, Fitch had praised the government's continued focus on implementation of structural reforms, but had said the medium-term fiscal consolidation strategy is "less aspiring" than in the past, which is a negative from a sovereign rating perspective.
"GDP growth prospects are expected to improve due to four factors - declining oil prices, cumulative effect of reforms, lower interest rates and better monsoon forecast. India's compulsion to reduce fiscal deficit has somewhat lessened," the official said. He stressed that centre and states are following a credible fiscal consolidation roadmap and 3.9 percent fiscal deficit target for 2015-16 was feasible.
Also the Current Account Deficit is expected to remain within manageable level, he added. Rolling out a new fiscal consolidation roadmap, Finance Minister Arun Jaitley had said in the Budget that fiscal deficit would be brought down to 3.9 percent of GDP in 2015-16, and then further to 3.6 percent and finally to 3 percent by 2016-17 and 2017-18, respectively.
The Finance Minister had said the government would achieve the 3 percent fiscal deficit target by 2017-18 as against 2016-17 as it intends to increase public investment to boost growth.
As regards CAD, Jaitley said it will be less than 1.3 percent of GDP.
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