The government today sought a sovereign ratings upgrade in a meeting with Fitch Ratings, citing its commitment to fiscal consolidation.
The government told the ratings agency that it would maintain fiscal discipline and seek to meet its fiscal deficit target of 3 percent of the gross domestic product in 2021-22, as stated in the Union Budget 2018, a government official told reporters. Officials from the Department of Economic Affairs under the Ministry of Finance met officials from Fitch Ratings today.
In 2017, Fitch had maintained India’s sovereign rating at BBB-, the lowest investment grade, with stable outlook, citing weak business environment and weak fiscal position. In the same year, Moody’s Investors Service upgraded India’s rating after a gap of 14 years, while Standard & Poor’s retained its rating.
Having brought down the fiscal deficit over the years, a departure from the path of fiscal prudence will impact inflation, officials are said to have told the ratings agency.
Privatisation Of State-Owned Banks Not On Cards
The government also informed Fitch that it is not looking to privatise state-owned lenders just yet, the official quoted above told reporters.
The call for privatisation gained momentum after diamond jeweller Nirav Modi allegedly colluded with some officials of Punjab National Bank to fraudulently obtain guarantees to avail of loans from the branches of various Indian banks overseas.
Finance Minister Arun Jaitley had ruled out privatisation after the Rs 12,700-crore fraud unfolded. Privatisation of public sector banks will need an amendment to the Banking Regulation Act and the current political opinion may not favour this idea, Jaitley had said at the Economic Times’ Global Business Summit.
The government assured Fitch that investigations at PNB are ongoing and action would be taken against offenders.
GST To Stabilise In 7-8 Months
The Goods and Services Tax will stabilise in the next seven to eight months and revenue from the new indirect tax will pick up once the e-way bill mechanism and invoice matching starts, the government is said to have told Fitch.
Ministry officials also told the agency that divestment receipts in the current financial year has touched Rs 1 lakh crore, and the Centre intends to sell stake in more loss-making public sector enterprises.