Govt not worried about downgrade; will contain deficit: FinMin

The Finance Ministry today said it is not worried about the threat of ratings downgrade by global agencies like Fitch as it is moving on the right track and will restrict fiscal deficit to 5.3 per cent of the GDP in 2012-13.

"We are not worried. We have been saying we are on right track. But people still distrust us and ask whether we will able to achieve fiscal deficit target... We will adhere to fiscal consolidation roadmap", Department of Economic Affairs (DEA) Secretary Arvind Mayaram told PTI, when asked about the threat of rating agencies like Fitch to downgrade the country's rating.

The government has taken a number of steps to restrict the fiscal deficit to 5.3 per cent of the GDP during the financial year, he said, adding that the process would continue in the subsequent years as well.

In view of rising expenditure and subdued growth in revenue collection, the Finance Ministry has already raised the fiscal deficit target to a more acceptable level of 5.3 per cent of Gross Domestic Product (GDP), as against 5.1 per cent estimated earlier.

Fitch, during a recent conference call in Tokyo, had reiterated its threat to downgrade India's rating against the backdrop of slowing growth, high inflation and rising fiscal deficit. It had earlier said that the possibility of downgrading the country's sovereign rating was more than 50 per cent in the next 12-24 months.

Another global agency Standard & Poor's had last month said that India faces one-in-three chance of rating downgrade in the next two years in case the government fails to push reforms in view of the political gridlock and ensuing general election in 2014.