Last Updated: February 01, 2024, 15:53 IST
Moody’s in August had affirmed a ‘Baa3’ ranking on India with a secure outlook.(Reuters File)
“I think it is worth bearing in mind that the largest proportion of the Union budget is still servicing interest payments,” Senior Vice President Christian de Guzman mentioned
India has not seen vital enchancment in debt affordability to justify a rethink of the nation’s sovereign scores improve, an analyst at Moody’s Investors Service mentioned on Thursday, after the federal government unveiled its final price range earlier than upcoming elections.
“I think it is worth bearing in mind that the largest proportion of the Union budget is still servicing interest payments,” Senior Vice President Christian de Guzman instructed Reuters in an interview.
“I think this is why we continue to perhaps keep the rating where it is because there hasn’t been as significant improvement in debt affordability.”
Moody’s in August had affirmed a ‘Baa3’ ranking on India with a secure outlook. The next ranking implies decrease financial danger, permitting a rustic to borrow at cheaper charges.
However, Guzman mentioned the federal government’s fiscal consolidation development stays intact which is a optimistic, however extra “proactive” measures on income technology will probably be crucial to obtain the 4.5% fiscal deficit goal by 2025/26.
Government expenditure could have to do the heavy-lifting on fiscal deficit consolidation which might show to be difficult, he added.
India will scale back its price range hole sharply in 2024/25 to 5.1% of gross home product (GDP), Finance Minister Nirmala Sitharaman introduced in her price range presentation, whereas revising the present fiscal yr’s hole decrease by 10 foundation factors to 5.8%.
Economic progress in India is “very healthy,” and that ought to assist the federal government maintain a variety of momentum in areas similar to income technology, Guzman mentioned.
Moody’s expects India’s actual gross home product to develop 6.2% in 2024/25.
The authorities, nonetheless, could have to help the financial system amid issues over world inflationary pressures, local weather-associated and geopolitical dangers, he mentioned.
Thursday’s interim price range implies a sure diploma of confidence by the present authorities “that they don’t need to actually pump prime the economy to win this election,” Guzman mentioned, including that the ranking company assumes common political stability will proceed in India.
(This story has not been edited by News18 employees and is revealed from a syndicated information company feed – Reuters)
