(Adds detail, official comment)
By Matthias Williams
NEW DELHI May 17 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 Indian 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)