Amid the government laying down the road map for fiscal consolidation and improving the health of the economy, rating agency Standard & Poor’s is visiting India next month to review the sovereign rating of the country.
The agency will discuss the outline of the Budget and review the existing subsidies provided by the government and its plans to reduce and manage them. “It will also review public debt and guaranteed debt of both central and state government; official debt management strategy in terms of numerical goals and timelines and planned borrowing mix; and details of other sources of contingent liability of the central government,” a senior official told The Indian Express.
The official added that the agency will discuss the new government’s “fundamental fiscal policy orientation as compared to the last government and against the Fiscal Responsibility and Budget Management (FRBM) Act 2003, to know its underlying philosophy, main goals and key proposed changes in the act.”
S&P is the only major credit agency to have a “negative” outlook on the long-term rating of India. Last year in November, the agency had cautioned India that its sovereign rating would be lowered from the current “negative” outlook within a year if the “policy drift” continued.
The agency will be meeting finance ministry officials on August 12.
During the visit, S&P would also focus on the revenue-side policies and plans of the new government including the introduction of Goods and Services Tax and new direct tax code and timeline of their implementation, along with potential revenue effect these may have.