Prudence and transparency is paying dividends, expect ratings agencies to appreciate this: CEA

Chief Economic Adviser V Anantha Nageswaran, whose pre-budget review set the stage for Thursday's interim Budget presented by Finance Minister Nirmala Sitharaman, told CNBC-TV18 that the government took a realistic approach in estimating fiscal parameters and asserted that growth and revenue projections are not overstated. Nageswaran contended that the commitment to prudence and transparency in fiscal management over the years is yielding positive results, suggesting that credit rating agencies should take note of these developments.

"It is realistic and we are not overestimating growth, we are not overestimating revenue buoyancy. We are doing it realistically and that shows that the path of prudence and transparency that has been followed over the last several years is paying dividends. And I think the rating agencies will and I hope, and they should take note of it," Nageswaran said in the post-Budget interview.

During a press conference following the interim Budget presentation, the Finance Minister, in response to a question about the government's message to rating agencies, Sitharaman said, "We are not just aligning with the fiscal consolidation roadmap as stated earlier; we are exceeding it. This straightforward statement should be duly acknowledged by every rating agency."

Ratings agency Moody's Investors Service on Thursday said that India has not witnessed a significant enhancement in debt affordability, thereby indicating that a reevaluation of the country's sovereign ratings upgrade is not currently warranted, as reported by Reuters.

TV Somanathan, Secretary of Finance, expressed a lack of expectation and confidence in the fairness of ratings agencies. He said that these assessments hold little significance for the government, as rating agencies are perceived to operate independently of fairness considerations. Somanathan emphasised the government's clarity on the perceived unfairness, as outlined in a recent paper by the Department of Economic Affairs, supported by substantial evidence.

Acknowledging the existence of double standards, Somanathan affirmed the government's pragmatic approach, accepting and adapting to these disparities. He refrained from making predictions or comments on potential rating outcomes, emphasising that the government's actions are driven by a commitment to what is deemed right for the economy rather than aiming for specific rating results. The ultimate judgment on these actions, according to Somanathan, is left to the discretion of the rating agencies.