Mumbai, Jan. 8: Global rating agency Fitch today once again warned that India could lose its investment grade rating because of worsening of its fiscal deficit and the economic slowdown but the government shrugged it off and claimed it wasn’t worried.
The international rating agency now has a BBB- rating on India, which falls in the lowest investment grade with a negative outlook.
In a conference call today, Art Woo, sovereign analyst at Fitch Rating, expressed the apprehension that the Centre could miss its fiscal deficit target of 5.3 per cent for the current fiscal.
Indicating that the possibility of downgrading the country’s sovereign rating was more than 50 per cent in the next 12-24 months, the rating agency said slowing growth, firm inflation and rising fiscal deficit were the three major factors that could lead to such a decision.
“We are not worried,” department of economic affairs secretary Arvind Mayaram told reporters in Delhi.
“We are on right track. But people still distrust us and ask whether we will able to achieve fiscal deficit target... We will adhere to fiscal consolidation road map,” Mayaram asserted.
This is not for the first time that the rating agency is warning about an impending downgrade.
The warning comes at a time the Centre has announced some bold measures in the form of foreign direct investment in multi-brand retail among others.
Last month, Fitch had said while the Centre allowed individual states to approve FDI in multi-brand retail, political and implemen- tation risk remained considerable.
The rating agency also expressed its apprehensions about the government’s ability to deliver on its fiscal policy goals.