Higher deficit must not impact India’s rating: DEA Secy

Given the credibility of the numbers projected in the Budget, he hoped the global rating agencies would retain India’s sovereign rating at the existing levels. Global rating agencies have the lowest investment-grade rating on India, which is just above the junk status.

As per the Budget numbers, India’s fiscal deficit is pegged at 9.5 pc of the GDP in the current fiscal and is expected to dip to 6.8 pc in 2021-22 beginning April 1.

“I don’t think that rating will be under pressure because every country across the world was impacted by the COVID-19 pandemic. This crisis was not only limited to India. Our recovery is faster than in the Western world. The Budget projects a nominal GDP growth rate of 14.5 per cent,” Bajaj said. “They should look at our Budget and the reforms the government has undertaken. The government will engage with them and explain the numbers. We hope that they retain the ratings,” the Department of Economic Affairs Secretary said.

Last month, the Economic Survey 2020-21 observed India’s sovereign credit ratings do not reflect the economy’s fundamentals pitched for sovereign credit rating methodology to be made more transparent and less subjective.“Never in the history of sovereign credit ratings has the fifth largest economy in the world been rated as the lowest rung of the investment-grade (BBB-/Baa3).,” it said.