The finance ministry on Monday pitched for a rating upgrade by rating firm Standard & Poor’s, citing impr-oved macroeconomic indicators, including the likelihood of the economy growing at 8% in FY16.
Chief economic advisor Arvind Subramanian, who made a presentation to representatives of the rating firm on steps taken to boost the economy, highlighted comfortable macroeconomic indicators such as low inflation and the fact that the fiscal deficit and CAD are under control, sources said. He pointed out that with restoration of macrostability, there’s room for monetary easing. The cumulative effect of reforms and better monsoon have been cited as reasons for growth to pick up in FY16 from 7.3% last year, sources said. S&P has assigned India ‘BBB-’ (investment grade) rating with stable outlook.
The finance ministry has cited two challenges — weak balancesheet of corporates and slowdown in exports — which the government was conscious of and taking appropriate steps for.
Financial services secretary Hasmukh Adhia highlighted steps such as capitalisation, governance reforms and better accountability of public sector banks to improve their health.
S&P representatives inquired about the government’s plan to deal with the turbulence created by devaluation of the yuan.
Subramanian said India’s fiscal deficit and CAD were under control and declining oil prices would help in improving the external sector. The government was committed to bring down the fiscal deficit to 3% by FY18, sources said. Subramanian also expressed the government’s commitment to implement the GST.
On August 15, agency Moody’s said India’s rating could be upgraded if expectations of gradual but credit positive reforms are realised in actual policy implementation and if the recent improvement in inflation, fiscal and current account ratios are sustained. Moody’s has a ‘Baa3’ rating with positive outlook for India.
* S&P has assigned India’s sovereign rating at ‘BBB-’ (investment grade) with stable outlook
* The chief economic advisor said fiscal deficit and CAD were under control and falling oil prices would help in improving the external sector
* S&P representatives inquired about the plans of the government to deal with impact of the turbulence created by devaluation of the yuan