Strong pitch for rating upgrade

New Delhi: India on Wednesday pitched for a sovereign rating upgrade during a meeting of North Block officials with Fitch Ratings, citing the country's commitment to fiscal consolidation and tax reforms.

Finance ministry officials showcased the steps taken by the government - such as the structural reforms and the stabilisation of the goods and services tax (GST) -that have helped the country clock an economic growth rate of 7.2 per cent in the third quarter of the current fiscal.

Fitch, at present, rates India as BBB-, the lowest investment grade sovereign rating, with a stable outlook.

The Union government wants Fitch to follow in the footsteps of its rival Moody's Investors Service and upgrade its rating.

Last November, Moody's had raised India's sovereign rating from the lowest investment grade of Baa3 to Baa2 - the first upgrade in almost 14 years - and changed the outlook from stable to positive.

Fitch has kept the India rating unchanged at BBB- for the last 11 years. The last upgrade happened on August I, 2006, when Fitch changed rating from BB+ to BBB- with a stable outlook.

Later, it changed the outlook to negative in 2012 and then again to stable in the following year, though it kept the rating unchanged at the lowest investment grade.

A rating upgrade by Fitch will be an endorsement of the Modi government's economic measures and help the central administration project the country to both local and global investors as an ideal investment location.

The BJP-led NDA faces crucial assembly polls in Karnataka, Madhya Pradesh, Chhattisgarh, and Rajasthan this year and general elections in 2019 and a rating upgrade helps in scoring political points in electoral campaigns.

Top finance ministry officials led by economic affairs secretary Subhas Chandra Garg, chief economic adviser Arvind Subramanian and principal economic adviser Sanjeev Sanyal laid bare the government's reforms road map when Thomas Rookmaaker, Fitch director (sovereign ratings), and other officials met them on Wednesday, sources said.

Fitch also raised queries about the GST and the recent fraud at Punjab National Bank (PNB).

Sources said the ministry told Fitch representatives that the GST had more or less stabilised and, once e-way bill and invoice matching start, there will be a pick-up in revenue collection in the next 7-8 months.

On the PNB scam, the ministry has said the investigation is on and action will be taken in the case once the probe is over.

With regard to the privatisation of public sector banks, the ministry has said that it is not on "immediate agenda".

During the discussions with the Fitch delegation, the government is understood to have said that it will follow the fiscal consolidation road map and will cut the fiscal deficit to 3 per cent of the gross domestic product (GDP) by 2020-21.


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