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Finance ministry prepares for global rating agencies

business Updated: Apr 28, 2016 11:59 IST
Suchetana Ray
Finance ministry

Economic affairs secretary Shaktikanta Das has asked officials to prepare lists of all the reforms undertaken by the government. (Vipin Kumar/Hindustan Times)

It is that time of the year when the sovereign credit rating agencies come to assess the performance of India’s economy and path of fiscal consolidation. Starting mid-May, representatives of top global rating agencies will visit north block, which houses the finance ministry, to interact with the officials for an overview of the Indian economy.

This is a crucial exercise as these ratings determine India’s investment worthiness.

Keeping the importance of these visits in mind, Shaktikanta Das, secretary of department of economic affairs, recently met all his officials to ensure full preparedness for the meetings with the rating agencies such as Fitch and Moody’s.

Das’ department that has to ensure that the Indian economy is in shape, and sources in the finance ministry says he has directed officials to create presentations.

The officials have been asked to start preparing lists of all the reforms undertaken by the Narendra Modi-led government to ensure that the path of fiscal consolidation is followed, and the deficit targets are met.

Moody’s has already raised the red-flag regarding the non-performing assets (NPAs) -- loans that do not yield returns -- situation in the public sector banks (PSBs). It said the mounting bad debts will impact India’s rating.

The NPA ratios of the PSBs, which hold more than 70% of the total banking system assets, large amounts of government securities and conduct government-directed lending, saw a marked increase in 2015.

The NPAs of PSBs rose by about Rs 1 lakh crore to Rs 3.93 lakh crore at the end of December 2015 compared to Rs 3 lakh crore at September-end same year.

Moody’s has kept India in the lowest investment grade category “Baa3” with positive outlook. Though, this is an improvement over India’s prospects as projected by agencies, two years back.

Sources said Das wants his officials to put their best foot forward, and has asked them to study the recent reports prepared on India by the rating agencies. He has also asked them to ensure that all their apprehensions about India are mitigated.