India on Wednesday pitched for a sovereign rating upgrade by Fitch, citing the latest growth figures, buoyant revenue collections and strong fundamentals and banking reforms.
Fitch has a BBB-, the lowest investment grade sovereign rating, on India, with a stable outlook. In November last year, Fitch’s rival Moody’s had raised India’s credit rating from the lowest investment grade of Baa3 to Baa2, and changed the outlook from stable to positive in 14 years. The Fitch rating of India is set for an annual review in a couple of months.
Fitch officials, led by Thomas Rookmaaker, director, sovereign ratings, met the top finance ministry brass, including DEA secretary Subhas Chandra Garg, chief economic adviser Arvind Subramanyan and principal advisor Sanjeev Sanyal. Official sources said ministry officials cited the bank recapitalisation programme, the adoption of the Insolvency and Bankruptcy Code, the GST (goods and services tax) reform, the latest surge in Q3 growth rate and visibly stabilising demonetisation effects on consumptions and GST revenue.
A finance ministry official said it is time for an upgrade from the current lowest investment grade rating. Growth has picked up. After being stabilised, GST revenues are improving and are likely to be much higher in the next fiscal as the new tax system sinks into the business community and traders. Number of GST registration has gone up. As an impact of GST, the number of taxpayers too has gone up.
Fitch also raised queries on GST and the recent fraud at the Punjab National Bank.
Sources said the ministry told Fitch that GST has more or less stabilised and after e-way bill and invoice matching starts, there will be a pick up in revenue collection in the next 7-8 months.
During the discussions, the government is understood to have pressed for its resolve on fiscal consolidation roadmap that will lower the fiscal deficit to 3 per cent of GDP by 2020-21.