New Delhi: Pitching for the country's rating upgrade, Finance Ministry officials on Monday informed credit ratings agency Moody's that the Budget 2014-15 has provided an impetus to growth and the government is taking steps to keep the fiscal deficit under check.
"We presented our case. The growth is coming back. The budget has strong growth impulses and response of the economy is positive. They have concerns about fiscal deficit. We explained that we will be able to maintain target," Finance Secretary Arvind Mayaram told reporters after meeting with the representatives of the Moody's.
He further said that revenue buoyancy was good and even multilateral agencies like International Monetary Fund (IMF) and the World Bank were optimistic about India's growth prospects.
Moody's has assigned 'Baa3' rating on India, with a stable outlook, which suggests the possibility of an upgrade.
According to Moody's, the rating "reflects high domestic savings and adequate foreign exchange reserves and the challenges posed by large fiscal deficits, recurrent inflation and weak infrastructure".
Admitting that inflation was a matter of concern in view of the poor monsoon, Mayaram said: "We have told them, we are taking care of the requirements (of food items). We have adequate stock so that if monsoon is below normal and if production is marginally down then our stocks are adequate to take care of contingency. We will be able to manage it."
Moreover, he added, the government has set up an Expenditure Management Commission which would look at broad contours of subsidy rationalisation.
Headed by former Reserve Bank Governor Bimal Jalan, the Commission is required to submit its interim report before the Budget for 2015-16 and final report in early 2016.
Improved performance of mining, manufacturing and services sector has pushed India's economic growth rate to two-and-half years high of 5.7 percent in the April-June quarter, a development which the Finance Ministry expects to continue for rest of the fiscal.
Representatives of another rating agency Standard & Poor's had met Finance Ministry officials on August 12. They had informed S&P about the government's road map to reduce fiscal deficit to 3 percent of GDP by 2016-17.
As regards the current fiscal, the government proposes to bring down the fiscal deficit to 4.1 percent of the GDP from 4.5 percent a year ago.
S&P currently rates India as 'BBB--', the lowest in the investment grade, with a negative outlook.
The representative of Fitch, which has affirmed India's long-term foreign and local currency issuer default rating (IDR) at 'BBB--' with stable outlook, indicating low default risk, too are expected to meet Finance Ministry officials shortly.