Warning by Fitch: India should Stick to Reforms and Meet Fiscal Targets

Putting further pressure on Indian government, which is keen to retain investment rates, Fitch ratings said on Monday “India needs to commit to its recent reform measures and meet its fiscal deficit targets. As we have previously said India’s patchy performance on policy implementation and the approach of a general election in 2014 could impede fiscal consolidation, suggesting political and implementation risk remain significant. We also need to observe the impact of reform and more broadly see how India’s macro-economic outlook develops over time. ”


This warning from Fitch comes after Standard and Poor’s analyst Kim Eng Tan last week told Reuters, the prospect, that India would lose its investment grade rating had receded somewhat as a result of economic reforms undertaken by the Government.

While discussing the raising of Taxes, Government sources told Reuters last week, that India is also cutting spending on Welfare, Defense, and road Projects. However, the Finance Minister, Chidambaram has restated a pledge to meet the fiscal deficit target, during his meetings with the foreign investors last week.