News Column

Govt to pitch for ratings upgrade

July 28, 2014

THE finance ministry plans to pitch for a credit ratings upgrade for the country at a series of meetings with global agencies like Standard and Poor's (S& P) in the next twoto- three months based on the low fiscal deficit estimates projected in the Budget.

Representatives from S& P and The Japan Credit Rating Agency (JCRA) are scheduled to meet finance ministry officials on August 12 and August 28.

Moody's next

"After this, discussions with representatives of rating agencies Fitch and Moody's will probably be held in September- October. We will pitch for a rating upgrade," a senior finance ministry official said. The finance ministry will impress upon rating agencies the resolve of the government to contain fiscal deficit at 4.1 per cent this fiscal and lower it to three per cent by 2016- 17, the official added.

In order to promote growth and investment, Union finance minister Arun Jaitley in the 2014- 15 Budget included measures to support faster economic growth such as allowing greater foreign direct investment (FDI) in insurance and defence, increasing spending on infrastructure, and introducing tax incentives for savings and investment.

Media blitz

S& P currently rates India ' BBB-', the lowest in the investment grade, with a negative outlook. Any further downgrade will push India's rating to the junk status making it difficult and costlier for Indian entities to borrow funds overseas. Moody's assigns ' Baa3' rating on India with a stable outlook. Fitch has affirmed India's long- term foreign and local currency issuer default rating (IDR) at ' BBB-' with stable outlook indicating low default risk.

The government is also planning to hard- sell India as an investment destination. The commerce and industry ministry has drawn up a strategy to launch a print, electronic and social media blitz to generate awareness about the investment opportunities in the country for overseas investors. India attracted $ 24.29 billion FDI in 2013- 14 compared to $ 22.42 billion in the previous fiscal. The Department of Industrial Policy and Promotion (DIPP) plans to target the traditional and important source markets overseas from where the country receives a large number of investment proposals.

Through its overseas media campaign, DIPP intends to project and showcase India as a favoured investment destination especially in the manufacturing sector.

DIPP also said that the department intends to release its campaign in the overseas market portraying strengths of and opportunities in the economy for investment and highlighting the comparative advantages India has over other investment destinations.

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Source: Mail Today (India)

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