global credit ratings agency Moody’s Investor Service expecting India’s GDP to moderate at 6.7 percent during 2017-18 (April-March), Department of Economic Affairs Secretary Subhash Chandra Garg hopes the growth rate to touch 7 percent by the end of fiscal year.

"Moody’s has credible ways to make assessment. Their judgement is 6.7 percent growth...Our wish and expectation and the way we are working is that we may end up closer to 7 percent growth," Garg

On Friday, after a gap of 13 years, Moody’s upgraded India’s sovereign ratings to Baa2 from its lowest investment grade (Baa3) giving credit to the Narendra Modi government’s reforms initiatives. The agency has now changed the outlook for India’s rating to stable from positive.

It said that the decision to upgrade the ratings is underpinned by Moody’s expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term.

"I think they (Moody’s) assessed in an emphatic way India’s growth potential, which is secure, based on structural reforms taken, institutional reforms taken in the last couple of years and a very credible fiscal management story. I think that is what underpins Moody’s assessment," Garg said.

Garg called the current financial year a ’transitional’ one, bearing the impact of major reforms like such as the demonetisation and the implementation the new indirect tax system-Goods and Services Tax (GST).

While there has been talks doing round of strained government finances, led by a possible shortfall of revenue collection, Garg said that the government will make a ’reasonably credible assessment’ of the fiscal situation--includes possibility of increasing government borrowing, thereby breaching the fiscal deficit target--  by the end of December.

The government had fixed a fiscal deficit target--difference between expenditure and revenue--3.2 percent of Gross Domestic Product (GDP) for 2017-18 and 3 percent for 2018-19, the lowest in the last seven years. Fiscal deficit of was 4.5 percent of GDP when Modi government took over.

The government’s finances have seemingly come under strain as India’s fiscal deficit during April-September was Rs 4.99 trillion or 91.3 percent of the budget estimate owing to increased spending. While India met deficit target of 3.5 percent of GDP last year, it was 83.9 percent of the target during the first six months.

Garg also said that the finance ministry has asked the Reserve Bank of India to transfer the surplus amount of Rs 13,000 crore to the government.

While the government had budgeted for Rs 58,000 crore dividend from the apex bank, in August the later paid only Rs 30,659 crore. This was less than half of the Rs 65,876 crore that was transferred to the Centre in financial year 2015-16.

While no official statement has been provided about the fall in dividends so far, analysts speculate that it is because of the additional costs incurred due to the printing of new currency notes, and also in managing the excess liquidity generated due to the sudden inflow of deposits into the banking system post demonetisation.