India's growth story credible: Finance Ministry tells Moody's

NEW DELHI: The finance ministry has assured the global ratings agency Moody’s that the proposed food security law will not derail the ongoing fiscal consolidation roadmap and that the India growth story is credible even though there may be some concerns right now.

“...it’s not as if the picture is fully rosy... All we have said is that we know there are problems but we have to take actions in a particular manner and the government is fully committed to take those actions so that the problems that we are seeing today are fully addressed,” Arvind Mayaram, secretary, department of economic affairs, told reporters after a meeting with Moody’s representatives on Tuesday. Rating agencies hold such meetings periodically with government officials to assess the economic situation as part of their review of sovereign rating. In January, Moody’s had reaffirmed India’s investment grade ‘Baa3’ sovereign credit rating with a stable outlook. The other two big international ratings agencies Standard & Poor’s and Fitch have a negative outlook on India’s rating, denoting a risk of downgrade.

Moody’s had last week said India's sovereign outlook is stable that does not warrant any action on the country's credit rating in the next 12-18 months. The agency representatives sought to learn from the finance ministry officials about the steps taken to check subsidy outgo and impact of the proposed Right to Food Bill. “We have a credible story that we have told them and they have appreciated what we have said. Now rest is up to them,” Mayaram said.

He said the fiscal numbers as well as the inflation situation has improved since the last meeting with Moody's representatives. “We raised the same points but with additional numbers. Everyday the numbers improve...The last time we had met (Moody’s), they (the numbers) have improved further. So that’s a good sign," he added.

Finance ministry P Chidambaram announced a new fiscal consolidation road map last fiscal that aims to cut fiscal deficit to 3% by 2016-17. The government has also taken tough decisions like raising diesel prices and pruning subsidies on LPG, fertiliser and sugar and steps to boost growth that slipped to a decade’s low of 5% in 2012-13. These steps include setting up of a Cabinet Committee on Investments and allowing FDI in multibrand retail.