Fitch satisfied with overall macroeconomic situation: Arvind Mayaram

Written by PTI | New Delhi | Updated: Feb 4 2014, 01:55am hrs
Arvind MayaramI think representatives of Fitch expressed satisfaction on the overall macroeconomic situation
Representatives of global rating agency Fitch today discussed India's prospects with finance ministry officials, who said they were satisfied with the country's overall macroeconomic situation.

"I think they (representatives of Fitch) expressed satisfaction on the overall macroeconomic situation. In fact, they also assessed that from the last time they had come, the situation now is much better," Department of Economic Affairs Secretary Arvind Mayaram told reporters after the meeting.

"They have some concerns on the banks' non-performing assets (NPAs), which we explained is also a matter of concern to us.

"However, the NPAs, as assessed today, are not anywhere above the benchmark and therefore it is not something where there is certainly a red light would be," Mayaram added.

To contain rising bad loans, the Reserve Bank proposed a slew of measures on January 30.

The RBI's Framework for Revitalising Distressed Assets in the Economy outlines a plan that will incentivise early identification of problem cases, timely restructuring of accounts considered viable, and prompt steps by banks for recovery or sale of unviable accounts.

The development came amid fears that bad loans will reach a record high of about Rs 2.9 trillion by the end of this financial year, or 4.5 per cent of total banking assets.

Meanwhile, finance ministry sources said Fitch Ratings also raised concerns about the fiscal deficit.

"Ministry officials allayed concerns raised by Fitch on the fiscal deficit front and reiterated the commitment to contain it at 4.8 per cent of GDP," sources said. The meeting was also attended by other senior officials.

Sources said the ministry expressed confidence that the current account deficit (CAD) would be narrowed to below USD 50 billion, or less than 2.5 per cent of GDP, in the current financial year, helped by curbs on gold imports and a range-bound rupee.

The CAD touched a record USD 88.2 billion, or 4.8 per cent of GDP, in 2012-13, mainly due to high oil and gold imports. The CAD had also put pressure on the local currency.

The government had hiked customs duty on gold to 10 per cent, resulting in imports of the metal falling sharply to 19.3 tonnes in November from 162 tonnes in May.

The finance ministry officials also asserted that investments would increase following approval of projects by the Cabinet Committee on Investment and the Project Monitoring Group.

As many as 287 stalled projects worth Rs 5.5 lakh crore have already been cleared and 250 such projects worth Rs 10 lakh crore are expected to be approved shortly.

The Indian economy may have expanded 4.5 per cent in 2012-13, according to an estimate released by the Central Statistics Office on January 31.

Growth is expected at less than 5 per cent in the current financial year. During the first half of 2013-14, GDP growth was 4.6 per cent.

Fitch currently rates India at BBB-, with a stable outlook.