The official, who met representatives from global ratings agency Standard & Poor's (S&P) in the finance ministry, said the targets laid out in the Budget regarding government finances were 'credible' and would be met. All in all, we believe the (Budget) numbers are very credible. And we will be able to meet our fiscal deficit target. And similarly on growth also, we told them (S&P) why we believe the targets can be met, Mayaram told reporters after his meeting with S&P representatives.
S&P maintains a BBB- rating on India with a negative outlook. Among the other two global ratings agencies, Fitch has a BBB- rating for India with a stable outlook, while Moody's has a Baa3 rating with a stable outlook.
In a meeting with S&P representatives that lasted for roughly two hours, Mayaram and other officials from various divisions of the finance ministry, including capital markets, budget, and infrastructure, discussed the various budget announcements with S&P and apprised the ratings agency of the centre's steps to boost manufacturing, revive infrastructure investment and reduce the fiscal deficit. There is a general belief now that the growth is coming back, especially in industrial and manufacturing sectors, and we will see a fairly higher growth than last year, Mayaram said. (Data released later in the day said industrial production grew a slower-than-expected 3.4% year-on-year in June compared with 5% in May).
The Modi government's first Budget was marked for its focus on infrastructure. The government announced it will develop a 100 smart cities, provide urban infrastructure even in rural areas, allow investment trusts for real estate and infrastructure, set up an authority for industrial corridors, expedite planning for the Amritsar-Kolkata Industrial corridor, and start planning on the Bengaluru Mumbai Economic Corridor and the Vizag-Chennai corridor.
The FY15 budget forecasts revenue receipts of R11.9 lakh crore, with net tax revenue of R9.8 lakh crore. Plan expenditure has been budgeted at R5.75 lakh crore, while non-plan spending is budgeted at R12.20 lakh crore. Fiscal deficit is budgeted at R5.31 lakh crore or 4.1% of GDP, compared to the revised estimate of 4.6% in FY14.
There have been concerns on R14,000 crore in net revenue foregone due to tax breaks. Mayaram, however sounded confident of achieving the revenue targets and said: "Even if we take a conservative growth forecast of 5.7-5.8% (for FY15), 19% tax growth is reasonable."
Finance ministry officials also discussed the government's disinvestment plans with S&P representatives. The target from sale of stake in state-owned companies and residual stake Hindustan Zinc and Balco for FY15 is R58,425 crore.
We believe the divestment targets very reasonable. Because when set the numbers of about R58,000 crore, the stock market was not doing so well. And today if we look at the stock market, market capitalization has steeply risen in the last three months. So we should get much better inflows from disinvestment, Mayaram said.