Fitch warns of lowering sovereign rate

If India fails to meet fiscal deficit target

Mumbai (PTI): Stating that the space to contain expenditure is very limited in the second half of the fiscal, global ratings agency Fitch on Monday said the fiscal numbers "look weak" and warned of a downgrade if the country is unable to meet fiscal deficit target.

"India's fiscal numbers look weak...Fiscal slippage could trigger negative rating action," Fitch Ratings' head of Asia-Pacific Sovereigns Andrew Colquhoun said on a conference call. The agency's lead analyst Art Woo added that fiscal management is a challenging task. "The fiscal side is proving more challenging...A slowdown in fiscal expenditure in the second half of the year remains quite challenging," Woo said.

It can be noted that last fiscal, due to a pressure from international rating agencies threatening to cut the country's sovereign rating to junk status if the fiscal deficit worsens, the government had massively cut its expenditure to meet its fiscal deficit target.

In the wake of a huge depreciation in the rupee and doubts over the revenue increase targets, the government has repeatedly asserted that it will be able to meet the fiscal deficit target of 4.8 percent. The current account deficit, which is being blamed as one of the primary reasons for the ongoing rupee depreciation, will come in at $75 billion in FY14 as against the $87.8 billion in the previous fiscal, Colquhoun said.