Government has pushed for a rating upgrade in a meeting with Fitch Ratings today, PTI reported. The government has said that it will stick to the path of fiscal consolidation. Finance Ministry is holding a meeting with Fitch today to pitch for a rating upgrade. In addition, the government has told the international rating agency that it is following the recommendations made by the Fiscal Responsibility and Budget Management (FRBM) panel, the report said. The government has also said that the fiscal deficit target will be maintained at 3 percent from 2021 onwards. Major structural reforms such as goods and services tax (GST) have been highlighted by the Finance Ministry officials to Fitch, reports said. “Compensation to states led to fiscal slippage in FY18,” government officials are believed to have told the international rating agency.
Fitch had kept India’s sovereign rating unchanged at ‘BBB-’ with stable outlook last time. International rating agency Moody’s had raised India’s sovereign rating to Baa2 from Baa3. After this year’s budget, Fitch had said that chances of India’s rating upgrade get restricted due to high debt burden.
For the fiscal year 2017-18, the direct tax collection has been pegged at Rs 10.05 lakh crore by the tax authorities. India introduced a Rs 2.11 lakh crore bank recapitalisation programme last year for the public sector banks last year to clean their account books which are already under immense pressure due to mounting non performing assets (NPAs). PTI had reported yesterday that the government may also highlight with the Fitch officials its bank recap plan. Even Moody’s had then praised India for launching such a recapitalisation programme to revive country’s weakening banking sector at a time when NPAs has surged above the danger mark.
Buoyed by the Moody’s upgrade, the government is hell-bent in ensuring that even Fitch upgrades its sovereign ratings. Chief Economic Advisor Arvind Subramanian and Economic Affairs Secretary Subhash Chandra Garg are part of the Finance Ministry team today.