Mumbai: India’s fiscal position is a concern for the country’s rating, Fitch Ratings said on Monday, although it said the deterioration revealed in the government’s interim budget on its own would not lead to a downgrade.
Fitch saw India’s consolidated deficit, the combined federal and states’ fiscal deficit, at 9.5% for the 2008-09 fiscal year that ends in March, and 7.7% in fiscal year 2009-10.
“Further fiscal deterioration is of concern from a rating perspective,” James McCormack, Fitch’s head of Asia-Pacific Sovereign Ratings in Hong Kong, said in an email.
Fitch gives India a local currency rating of “BBB-minus”, its lowest investment-grade level, with a negative outlook.
“The more immediate fiscal deterioration is largely accounted for in the ratings,” McCormack said, adding that Fitch would look at the full budget after national elections and recommendations of the 13th Finance Commission, a federal panel for allocating revenues between the Union government and the states, to gauge the short and medium-term fiscal outlook.
The government forecast a fiscal deficit of 6% of gross domestic product (GDP) in 2008-09, well above an original target of 2.5%, and 5.5% in 2009-10.
The government expects the economy to grow 7.1% in 2008-09, a slowdown from 9% and above in the previous three years, and forecast similar growth for 2009-10.
India has no plan to sell bonds for funds: Chawla
New Delhi: The government, which unveiled an additional Rs45,000 crore of borrowing on Monday, won’t raise the funds from the market by selling bonds, economic affairs secretary Ashok Chawla said.
The government is not considering the options of private placement with the Reserve Bank of India and sale of bonds overseas, Chawla told reporters in New Delhi on Monday. Purchase of market-stabilization securities by the central bank or the government could be one of the options, Chawla said.
The government today said it will borrow Rs2.61 trillion in the fiscal year ending 31 March.