India pitches for Fitch upgrade after S&P blow

New Delhi: India's economic growth story is intact and the current account deficit under control, senior Finance Ministry officials told a team from global ratings agency Fitch on Thursday, weeks after S&P cut its outlook for Asia's third largest economy.

The visit came as the Indian rupee tumbled to a record low against the dollar, with the crisis in the euro zone adding pressure on a currency already under fire from weak current account and fiscal deficits.

In April, Standard & Poor's downgraded the outlook for India to negative from stable, citing poor fiscal health and deteriorating economic indicators.

The Indian team pointed to surging inflows of foreign money to allay concern raised by Fitch about the current account deficit, a senior Finance Ministry official at the meeting said on condition of anonymity.

"We pitched for an upgrade," the official said.

"You look at FDI inflows ... FII inflows have been tremendous this year," he said, referring to foreign direct invest and foreign institutional investors.

The official defended India's economic performance saying there were "many positives" and unlike many other major economies, India had not been downgraded during the last few years of global financial turmoil.

A Fitch official declined to comment as he left the meeting at the Finance Ministry.

FDI into India was up 55 per cent last year, government data shows, despite investor anger about changes to tax rules and slow progress on much vaunted economic liberalisation under a government hit by graft scandals and hemmed in by allies hostile to business-friendly policies.

India has a BBB- rating on its sovereign debt rating from Fitch and S&P, similar to the Baa3 rating from Moody's. All are just one notch above non-investment grade or "junk" status

India basked in two decades of strong growth after opening up its economy in 1991. But gross domestic product growth (GDP) slowed to less than 7 per cent last year, too little for the rapid poverty reduction the country aims for.

On Wednesday, Finance Minister Pranab Mukherjee told parliament to brace for unspecified "austerity measures" as he tries to rein in the fiscal deficit, which swelled to 5.9 per cent of GDP in the last financial year. He said India's economic performance was strong considering global headwinds.

Mukherjee has vowed to cut subsidies on fuel, a major strain on government finances, but many doubt he has the political capital to do so quickly.