"I strongly believe there is a case for S&P and Fitch to upgrade. Even if it is one only notch or two notch above, but certainly there is no case for a downgrade," Department of Economic Affairs (DEA) Secretary Arvind Mayaram told PTI.
He said the two agencies are scheduled to come next month when the Finance Ministry will present the state of the economy to them and highlight the steps that the government has taken to contain fiscal deficit.
"We are going to have discussion with rating agencies some time in April. Fitch and S&P will come," he said. Moody's will also come up for country rating, but no time has been fixed yet, Mr Mayaram added.
Both S&P and Fitch had earlier threatened to downgrade India's credit rating as an aftermath of the expansionary policy which led to a rising fiscal deficit. The fiscal deficit had touched a high of 5.8 per cent in 2011-12.
The government in the recent months has taken a host of reform initiatives, including liberalising foreign investment norms, partial decontrol of diesel and capping of subsidized LPG cylinders, with a bid to check the rising subsidy bill.
Besides, with a cut in expenditure it has been able to restrict the fiscal deficit for the current financial year at 5.2 per cent. The government aims to contain deficit at 4.8 per cent in 2013-14 and bring it down to 3 per cent by 2016-17.
After the presentation of Union Budget, S&P and Fitch had said India's sovereign rating is unaffected but had warned that policy execution and controlling subsidies would be the key risks to look out for during the year.
"With elections due in a little more than a year, the adherence to fiscal consolidation remains encouraging," Fitch had said, even as S&P termed it as "prudent". Besides, Moody's had termed the budget as 'credit positive'.
S&P currently rates India as 'BBB-', lowest in the investment grade. Any further downgrade will push India's rating to the junk status, making it difficult and costlier for Indian entities to borrow funds overseas.?
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