India pitches for higher Fitch ratings
18 May 2012 12:46 AM GMT
India on Thursday pitched for higher ratings from global agency Fitch citing good inflow of foreign funds, high returns from the market and steps being taken by the government for fiscal consolidation.
'We pitched for a rating upgrade. We told them look at the FDI inflows, look at the returns in the market. We said we are committed to capping subsidy at 2 per cent,' said a finance ministry official after a meeting with the representatives of Fitch here.
Fitch had last rated India in 2010, giving India's foreign and local currency rating at 'BBB-/stable'. Last year, the agency had affirmed the 'BBB-' rating for India indicating moderate degree of safety regarding timely servicing of financial obligations.
The representatives of the US-based credit rating agency would meet the officials of the Finance Ministry again tomorrow and Fitch is likely to come out with its assessment within a month.
The official said that with FDI inflow at its highest and FIIs pumping money into Indian markets, the country is an able candidate for a ratings upgrade. Since 2011, Fitch has downgraded all major economies.
Asked if Fitch raised concerns over the burgeoning current account deficit (CAD), which arises when import of goods and services exceeds a country's exports, the official said that with high inflow of foreign funds CAD is expected to be high.
'When you have this kind of inflow, a high CAD is normal,' he said. CAD had touched 4 per cent of GDP at the end of December 2011.
The foreign direct investment (FDI) into India in the last fiscal was around $36.50 billion (around Rs 1.82 lakh crore). Besides, FIIs have put in around $12 billion into the Indian markets in the last two months.
High CAD is also putting pressure on the rupee, which has slumped 22 per cent since the beginning of the year. It plunged against the US dollar to a historic low of 54.56 before closing yesterday at 54.50, the lowest closing ever.
Finance ministry officials had earlier held similar meetings with representatives of other credit rating agencies - Moody's and Standard and Poor's. Much to the discomfort of the government, S&P last month lowered India's rating outlook to negative from stable, while retaining the rating at BBB. It had cited poor fiscal conditions and economic fundamentals for revision in outlook.
'We pitched for a rating upgrade. We told them look at the FDI inflows, look at the returns in the market. We said we are committed to capping subsidy at 2 per cent,' said a finance ministry official after a meeting with the representatives of Fitch here.
Fitch had last rated India in 2010, giving India's foreign and local currency rating at 'BBB-/stable'. Last year, the agency had affirmed the 'BBB-' rating for India indicating moderate degree of safety regarding timely servicing of financial obligations.
The representatives of the US-based credit rating agency would meet the officials of the Finance Ministry again tomorrow and Fitch is likely to come out with its assessment within a month.
The official said that with FDI inflow at its highest and FIIs pumping money into Indian markets, the country is an able candidate for a ratings upgrade. Since 2011, Fitch has downgraded all major economies.
Asked if Fitch raised concerns over the burgeoning current account deficit (CAD), which arises when import of goods and services exceeds a country's exports, the official said that with high inflow of foreign funds CAD is expected to be high.
'When you have this kind of inflow, a high CAD is normal,' he said. CAD had touched 4 per cent of GDP at the end of December 2011.
The foreign direct investment (FDI) into India in the last fiscal was around $36.50 billion (around Rs 1.82 lakh crore). Besides, FIIs have put in around $12 billion into the Indian markets in the last two months.
High CAD is also putting pressure on the rupee, which has slumped 22 per cent since the beginning of the year. It plunged against the US dollar to a historic low of 54.56 before closing yesterday at 54.50, the lowest closing ever.
Finance ministry officials had earlier held similar meetings with representatives of other credit rating agencies - Moody's and Standard and Poor's. Much to the discomfort of the government, S&P last month lowered India's rating outlook to negative from stable, while retaining the rating at BBB. It had cited poor fiscal conditions and economic fundamentals for revision in outlook.
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