The government faces a crucial month ahead with finance ministry officials preparing to make a strong pitch about India's robust macroeconomic fundamentals in consultations with US-credit rating agencies beginning this Friday, ahead of possible sovereign ratings review by credit-raters.
The consultations with Fitch will be held on April 12, followed by a meeting with Standard and Poor's (S&P) on April 25 and Moody's on May 5, sources told Hindustan Times.
Question marks continue to loom over the state of the economy hit by a sliding rupee, galloping prices, delicate government finances and widening current account deficit (CAD).
Last year, the three agencies were unsparing in their criticism of India's macro-economic fundamentals and precarious public finances.
India's economic growth is set to slump to a 10-year low of 5% in 2012-13 proving fears of a widespread slowdown as factories produce less, exports shrink, companies offer fewer jobs and prices continue to remain high.
India's CAD - the gap between inflows of foreign currency and outflows - soared to a record 6.7% of gross domestic product (GDP) during October-December, hit by high oil and gold imports and subdued exports.
Finance minister P Chidambaram in the budget for 2013-14 unveiled plans to reduce India's fiscal deficit to 3% of GDP in five years, demonstrating the government's intent to walk the talk on fiscal discipline.
The actual fiscal deficit for 2012-13 is likely to be lower than earlier estimates of 5.2%, with the government managing to achieve the Rs. 10,38,037-crore tax target for 2012-13
High subsidies have widened the government's fiscal deficit - shorthand for the amount of money that it borrows to fund its expenses - limiting its elbow room to spend on investing in infrastructure and development schemes to spin jobs and multiply incomes.
"If we reach the revenue target and if there are some savings, the fiscal deficit will be better than 5.2% that I have projected," Chidambaram had said at a press meet.
The government is of the view that the CAD for the full fiscal year would be more tolerable.
S&P had warned in October that India still faces a "one in three" chance of a downgrade despite the recent spate of moves to open up insurance, pension and multi-brand retail sectors to foreign investment.
A downgrade would mean that the government would have to pay higher interest rates on its public borrowings, which could potentially erode India's attractiveness as a global business hotspot and investment destination.
Last month, Moody's Analytics, an arm of ratings agency Moody's, had that forecast that India's economy will grow by 7% in 2014 but warned that achieving the double-digit growth rate was "wildly optimistic" unless structural reforms measures were taken.