Will try to convince rating agencies on fiscal consolidation: Fin Min

Subhash Garg, Economic Affairs Secretary
The finance ministry said on Friday it will try to convince rating agencies on India's commitment to fiscal consolidation, within hours of Fitch Ratings saying that high debt burden constrains the country's rating upgrade.

Fitch's comments added to the woes of the stock market already reeling under the government's decision to impose 10 per cent long term capital gains tax on equities.

The 30-share Sensex plummeted 840 points -- its biggest single-day slump since August 24, 2015 -- while the broader NSE Nifty tanked over 250 points to finish below the 10,800- mark.

"No question of losing hope," replied Economic Affairs Secretary Subhash Chandra Garg when asked if the government has lost hope of sovereign rating upgrade in wake of Fitch's comment.

In an interview to PTI, the secretary said another leading global agency Moody's had upgraded India's sovereign ratings last year.

Moody's on Thursday said the fiscal deficit projection of 3.3 per cent for FY19 is in line with its forecast and the target will be achieved.

"So I don't expect any downgrade and any outlook change," the secretary said.

Garg said the government would try to convince Fitch and another agency Standard & Poor's on its commitment to stick to the fiscal consolidation path.

The 3.3 per cent fiscal deficit projected for the next fiscal is reduction in spending and not expansion, he added.

Garg said a convincing path has been laid down in the Budget by amending the Fiscal Responsibility and Budget Management (FRBM) Act.

"I think those should convince rating agencies...ours is a convincing story to tell. I hope they get convinced," he said.

Finance Minister Arun Jaitley had in his Budget speech projected a higher fiscal deficit of 3.5 per cent of the GDP for 2017-18, as against the target of 3.2 per cent, on account of GST implementation and deferment of spectrum auction.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel