Fitch mildly positive on India’s recent initiatives

India's recent economic reforms and fiscal consolidation measures received some appreciation from Fitch Ratings as the rating agency joined its peers in a revision of the tone on the commentary on the country's economic outlook from decidedly negative to mildly positive.

After Moody's and Standard & Poor's acknowledged the government's initiatives a few weeks back, Fitch on Monday said it found the pronouncements "encouraging".

"Public commitments and policy announcements by the Indian government so far in 2013 are encouraging signals that the authorities want to maintain the momentum towards fiscal consolidation and structural reform generated since last summer... The authorities appear committed to keeping fiscal deficit in check," Fitch said in a statement. The agency had only last month restated its earlier threat of a downgrade.

However, the slight change in tone notwithstanding the ratings firm warned that its final assessment would hinge on "policy execution and the impact on trend growth".

The agency had put India's investment-grade `BBB-' rating on watch last June, and warned that there was a good chance of its being downgraded to "junk". It said last month that the threat of downgrade remained because of bad macro fundamentals.

Reuters quoted an analyst at Standard & Poor's as saying last week that the possibility of India's loss of investment grade credit rating had receded somewhat due to the steps undertaken by the government since last September.

Despite lauding recent policy steps and assurances of finance minister P Chidambaram, Fitch said, India needed to do more, including unveiling "a credible" medium-term fiscal plan.