Fitch Team In North Block, Flags Fiscal Deficit Concerns - The New Indian Express

Fitch Team In North Block, Flags Fiscal Deficit Concerns

Published: 04th February 2014 06:00 AM

Last Updated: 04th February 2014 01:05 AM

Even as slowdown continues to stare at the Indian economy, weighed down by high interest rates, lack of investment inflows, flight of capital, representatives of global credit rating agency and consulting firm Fitch on Monday called on the top brass of the Finance Ministry and raised concerns about country’s fiscal deficit.

The agency currently accords a stable outlook on India's sovereign rating at BBB-. Earlier in June, Fitch revised India’s outlook to “stable from negative” because of the measures initiated by the government to cut fiscal deficit.

Sources claimed that the Ministry officials also allayed concerns raised by (the rating agency) Fitch on the fiscal deficit front and reiterated government’s commitment to contain fiscal deficit at 4.8 per cent of GDP.

Fitch representatives met economic affairs secretary Arvind Mayaram, and other senior officials at the Finance Ministry.

“The ministry expressed confidence that the current account deficit (CAD) will be brought down below $50 billion or less than 2.5 per cent of GDP in the current fiscal as curbs on gold imports are reaping results and rupee has been range-bound.”

Last fiscal, CAD touched a record high of $88.2 billion or 4.8 per cent of GDP mainly due to high oil and gold import. The high CAD also put pressure on domestic currency.

In order to contain gold imports, the government hiked gold import duty to 10 per cent on inward shipment. As a result, gold imports came down sharply to 19.3 tonnes in November from 162 tonnes in May.

As many as 287 stalled projects with an estimated investment of 5.5 lakh crore and 250 other projects with an estimated investment of 10 lakh crore are likely to approved shortly by the Cabinet Committee on Investment and the Project Monitoring Group. This, sources said, will help India to reignite its economy.

The Indian economy grew by 4.5 per cent in 2012-13 and is expected to grow at less than 5 per cent in the current fiscal. During the first half of the current fiscal, GDP growth was at 4.6 per cent.

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