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'Govt committed to keep fiscal deficit at 5.3% this fiscal'

Last Updated: Tuesday, December 4, 2012 - 15:05

New Delhi: Government is committed to restricting fiscal deficit to 5.3 percent this fiscal and has adequate cash balance to deal with the situation, the Finance Ministry told global rating agency Moody's on Tuesday.

"We discussed inflation, (fiscal) deficit, CAD (Current Account Deficit), stressed banking system...," Department of Economic Affairs Secretary Arvind Mayaram told reporters after his meeting with representatives of Moody's here.

He also said the government did not pitch for any rating upgrade from Moody's.

"Why would we ask anything? We just told them our story, that's for them to decide," the Secretary added.

The meeting took place a day after another leading agency Fitch cautioned India that fiscal slippages in the run-up to 2014 general elections and declining growth could result in rating downgrade to below the investment level.

When asked what the representatives were told about the economic situation, Mayaram said they were apprised of the government's commitment on fiscal deficit front, cash balance position, among other indicators.

Last month Moody's said its credit outlook for India is stable but cautioned that high fiscal deficit and persistent inflationary pressure would continue to pose challenge for the economy.

It had said that its 'Baa3' sovereign rating is supported by credit strengths which include a large, diverse economy, strong GDP growth as well as savings, and investment rates.

Meanwhile, another Finance Ministry official said that government's recent reform measures and currency exchange rate scenario also came up for discussions.

"We will stick to 5.3 percent fiscal deficit target, no extra borrowing required. The Secretary has explained to Moody's representative that everything is fairly good," he said.

Moody's were also told that government's cash balance position is "fairly good" for past two-three months, he said.

Meanwhile, Moody's in a statement said that India's environment is characterised by slow economic growth, high inflation, high interest rates, and a weak local currency.

Government has pegged its market borrowing for the current financial year at Rs 5.7 lakh crore.


First Published: Tuesday, December 4, 2012 - 15:03
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