The Indian government believes that the sovereign rating given to the nation is not a real representation of its economic strength, and as a result, it has been at conflict with S&P Global Ratings, Moody’s Investors Services, and Fitch Ratings.
The finance minister told reporters after the budget on February 1 that the Indian government is “even bettering it” its fiscal consolidation road map, in addition to being in line with it.
“But on a recurring basis, it’s our responsibility to inform them that economies, especially emerging market economies like India, are undergoing significant systemic reforms that are really starting to show results,” the finance minister stated.
Global rating agencies should consider India’s reforms as a whole, according to Finance Minister Nirmala Sitharaman, who also mentioned that macroeconomic stability has been sustained.
The Center is aiming for a fiscal deficit of 5.1 percent of GDP in 2024–25, which is significantly less than the 5.3 percent predicted by many, according to the interim Budget.
“So many reform initiatives were included in the Atmanirbhar Bharat announcements. If not, we would not have done away with over 68,000 regulations that were simply too outdated and were being used as tools by those looking for work. Thus, systemic changes have persisted, including the pre-COVID GST and IBC measures as well as numerous other changes like professionalizing public sector banks, among others, the speaker stated.
Against the backdrop of a provisional budget lacking growth-oriented objectives, the rather conservative 11% augmentation in capital expenditure, in contrast to the revised target of 28%, may not engender widespread optimism. However, it has set off the market for the next rally in anticipation of the final show on the July budget. This is attributed to the authoritative tone and narrative of the statements, which convey a firm grip on economic matters and a commitment to implementing forward-looking measures. Notably, the market exhibits growing confidence in the current government’s electoral prospects, fostering expectations of a heightened focus on capital expenditure in the coming years.
The finance minister told reporters after the budget on February 1 that the Indian government is “even bettering it” its fiscal consolidation road map, in addition to being in line with it.
The Center is aiming for a fiscal deficit of 5.1 percent of GDP in 2024–25, which is significantly less than the 5.3 percent predicted by many, according to the interim Budget.
“So many reform initiatives were included in the Atmanirbhar Bharat announcements. If not, we would not have done away with over 68,000 regulations that were simply too outdated and were being used as tools by those looking for work. Thus, systemic changes have persisted, including the pre-COVID GST and IBC measures as well as numerous other changes like professionalizing public sector banks, among others, the speaker stated.
Budget 2024 :Rating Agencies
Christian de Guzman, senior vice president and chief analyst for Moody’s in India, commented on the interim budget and stated that the government has “firmly” communicated its commitment to achieving its fiscal consolidation goals.
“The government showed fiscal restraint in not resorting to large handouts or increasing discretionary spending ahead of this year’s elections, although political considerations likely influenced the lack of significant tax measures,” de Guzman said.
However, considering the difficult global environment, the possibility of shocks related to climate change, and any spending needs that are not currently covered by the budget, he questioned whether the government could meet its fiscal targets.
Furthermore, because the budget projects that debt servicing costs will take up an ever-larger share of revenue, the anticipated fiscal consolidation will not lessen the pressure on debt affordability in the face of high current interest rates. We anticipate that the final budget, which will be unveiled following the elections, will offer more precise details regarding India’s medium-term fiscal consolidation trajectory,” de Guzman continued.
