India pitches for Fitch upgrade after S&P blow

NEW DELHI Thu May 17, 2012 10:05pm IST

1 of 2. Labourers work at a construction site of a commercial complex in Mumbai April 26, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

NEW DELHI (Reuters) - India's economic growth story is intact and the current account deficit under control, senior Finance Ministry officials told a team from global ratings agency Fitch on Thursday, weeks after S&P cut its outlook for Asia's third largest economy.

The visit came as the rupee tumbled to a record low against the dollar, with the crisis in the euro zone adding pressure on a currency already under fire from weak current account and fiscal deficits.

In April, Standard & Poor's downgraded the outlook for India to negative from stable, citing poor fiscal health and deteriorating economic indicators.

The Indian team pointed to surging inflows of foreign money to allay concern raised by Fitch about the current account deficit, a senior Finance Ministry official at the meeting said on condition of anonymity.

"We pitched for an upgrade," the official said.

"You look at FDI inflows ... FII inflows have been tremendous this year," he said, referring to foreign direct investment and foreign institutional investors.

The official defended India's economic performance saying there were "many positives" and unlike many other major economies, India had not been downgraded during the last few years of global financial turmoil.

A Fitch official declined to comment as he left the meeting at the Finance Ministry.

FDI into India was up 55 percent last year, government data shows, despite investor anger about changes to tax rules and slow progress on much vaunted economic liberalization under a government hit by graft scandals and hemmed in by allies hostile to business-friendly policies.

India has a BBB- rating on its sovereign debt rating from Fitch and S&P, similar to the Baa3 rating from Moody's. All are just one notch above non-investment grade or "junk" status

India basked in two decades of strong growth after opening up its economy in 1991. But gross domestic product growth (GDP) slowed to less than 7 percent last year, too little for the rapid poverty reduction the country aims for.

On Wednesday, Finance Minister Pranab Mukherjee told parliament to brace for unspecified "austerity measures" as he tries to rein in the fiscal deficit, which swelled to 5.9 percent of GDP in the last financial year. He said India's economic performance was strong considering global headwinds.

Mukherjee has vowed to cut subsidies on fuel, a major strain on government finances, but many doubt he has the political capital to do so quickly.

(Editing by Robert Birsel)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Adani Project

Adani Project

Australia approves Adani's $16 bln Carmichael coal project  Full Article 

India-U.S. Talks

India-U.S. Talks

Kerry to woo Modi's India, but quick progress unlikely  Full Article 

Paring Debt

Paring Debt

Jaiprakash to sell hydro plants to Reliance Power  Full Article 

Nifty Falls

Nifty Falls

The broader index hits lowest in nearly a week on profit taking  Full Article 

Mideast Conflict

Mideast Conflict

U.N. Security Council calls for humanitarian ceasefire in Gaza  Full Article 

Market Eye

Market Eye

Foreign investors prefer Indian cyclicals, utilities - Macquarie  Full Article 

Debt Investment

Debt Investment

India's FII debt limit hike credit-positive, says Moody's  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage