India pitches for rating upgrade from Fitch

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SME Times News Bureau | 18 May, 2012
The Indian government Thursday asked Fitch to upgrade the country's sovereign ratings, claiming that current account and fiscal deficit were under control and flow of capital from overseas would continue as India's growth story remained intact.

"We pitched for a rating upgrade," a finance ministry official, who did not want to be identified, told reporters after a meeting with Fitch representatives here.

During a meeting with representatives of the global ratings agency Fitch at North Block here, finance ministry officials emphasised that India's growth story was intact and the government was committed for fiscal consolidation.

"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 percent of GDP," the official said.

Another official pointed out that flow of foreign direct investment (FDI) in India grew by 55 percent to $36.50 billion in 2011-12.

Besides, the foreign institutional investors (FII) have pumped in almost $12 billion in the Indian market in the past two months.

Fitch assigns India foreign and local currency rating of BBB- with stable outlook. The US-based agency assigned this rating to India in 2010 and affirmed it last year.

Representatives of Fitch are scheduled to meet the finance ministry official again on Friday. Fitch is likely to announce its review on India's sovereign ratings in a month.

The meetings take place in the backdrop of a sharp drop in the value of rupee and sell-off in the equity markets.

The Indian rupee fell to a record intra-day low for the second session in a row Thursday. The partially convertible rupee slipped to a new low of 54.60 to a dollar, surpassing Wednesday's low of 54.52.

Finance Minister Pranab Mukherjee Wednesday said that India's growth story was intact and the government would introduce austerity to ensure fiscal consolidation and boost investors' sentiments.

Fitch's review will come after cut in outlook by Standard & Poor's.

Last month, Standard & Poor's lowered its outlook on India to "negative" from "stable" and warned of a ratings downgrade citing deteriorating economic indicators and slow progress on fiscal reforms in the backdrop of a "weakened political setting".