Economic Survey 2013: Govt takes steps to improve interaction with rating agencies

NEW DELHI: Amid concerns of possible downgrade of India's credit rating, the Economic Survey on Wednesday said the government is taking steps to improve interactions with rating agencies to ensure that they make "informed decisions".


"The government is taking a number of steps to improve its interaction with the major Sovereign Credit Rating Agencies ( SCRAs) so that they make informed decisions," the Survey tabled in Parliament said.

Rising fiscal deficit has been flagged as a major concern for the domestic economy by rating agencies. There are concerns that credit ratings could be downgraded unless there are concrete measures to improve the financial situation amid slowing growth.

For the current fiscal, the country's fiscal deficit is projected to be 5.3 per cent of the GDP.

Usually, India's sovereign debt is rated by six major agencies. They are Fitch Ratings, Moody's Investors Service, Standard and Poor's (S&P), Dominion Bond Rating Service (DBRS), Japanese Credit Rating Agency (JCRA), and Rating and Investment Information Inc, Tokyo (R&I).

At present, Fitch and S&P have negative outlook on the Indian economy while Moody's, JCRA, R&I and DBRS have a stable outlook.

Lower credit rating could make borrowing, especially from international markets, difficult

Last month, Moody's had cautioned that high fiscal deficit could pull down the growth in the coming years.

"Large government deficits and debt ratios as well as supply constraints in the form of infrastructure, policy and administrative inefficiencies constrain the sovereign credit profile," the rating agency had said.

Stating that government finances are the weakest aspect of India's macroeconomic profile, Moody's had said that sustained improvement in public finances could result in rating upgrade.