High deficit hurting India rating: Fitch

International rating agency Fitch said on Tuesday the change in India's sovereign rating is constrained by the high level of fiscal deficit and its review will be done after the budget for 2005-06 has been presented.

There needs to be a strong commitment to fiscal consolidation and status of public finances was going to be crucial for a view on rating, Fitch director (Asia-Sovereign rating) Brian Coulton said in Mumbai.

The current rating outlook on India's domestic and foreign currency rating (both BB+) was stable and there are no plans to change it till the union budget for the next fiscal has been presented, Coulton said.

This budget would be crucial as it would be the first announcement for entire fiscal by the UPA government, he said.

BB+ rating for India falls in the sub-investment grade and the hurdle is a little bit higher when rating is to be upgraded to investment grade, he added.

The combined fiscal deficit of the centre and state governments of 9-10 per cent was high compared to the level prevailing in Asian countries, Coulton said.

Still the fiscal consolidation does not seem to get high priority. The action on this front could be taken when the economy was doing good, like currently, he said.

Referring to steps for arresting deficit, he said policies to clamp subsidies, broaden the tax base and privatise assets would release resources for investments in public infrastructure.