Pitching for an upgrade in sovereign credit ratings for India, the finance ministry on Monday made a presentation to global rating agency Moody?s Investor Services, citing sound fundamentals of the economy and series of bold decisions taken by the government to push reforms and facilitate investment in the country.
Starting its annual structural interaction with the government, representatives of Moody’s expressed concern over the fiscal slippages which are threatening to derail the fiscal consolidation road map, and persistently high inflation, which is hurting investments in the country.
Currently, Moody?s government bond ratings for foreign currency debt and domestic currency debt are ?Baa3? with a stable outlook and ?Ba1? with a positive outlook. The last upgrade done by Moody’s was in 2004. The government argued that India has strong credentials that are substantially above its present rating. The Indian economy has maintained high growth and has shown resilience in the face of global economic crisis.
A senior finance ministry official said the government on its part has expressed concern on the recent downgrade of Indian banking system by Moody?s. The government official argued that India banks are financially sound and such downgrade can dent the investor confidence.
Moody?s recently downgraded the outlook for the Indian banking system to ??negative?? from ??stable?? saying that economic slowdown would impact asset quality, capitalisation and profitability. However, differing with the downgrade accorded by Moody?s, ratings agency Standard & Poor?s today upgraded the Indian banking sector saying its domestic regulations are in line with international standards. Ratings are significant as they help the country and other entities borrow funds globally at competitive rates.
According to the the Reserve Bank of India, the growth rate during the current fiscal is expected to moderate to 7.6%, but still higher in comparison to the developed world which is gripped with financial uncertainty. However, India has been braving high inflation and the Centre’s fiscal deficit may exceed budget estimate of 4.6% in view of poor tax collection and low realization from sale of government equity in state-owned companies.