26.9 C
New Delhi
Friday 18 October 2019
Economy Budget strikes balance between fiscal prudence, growth: Moody's

Budget strikes balance between fiscal prudence, growth: Moody’s

-

- Advertisment -

New Delhi: The Budget for 2018-19 strikes a balance between fiscal prudence and growth, and a “slight” slippage in fiscal deficit has no material impact on overall economic strength.

The government has revised its 2018-19 fiscal deficit projections to 3.3% of GDP and for the current fiscal to 3.5% of GDP, against original targets of 3% and 3.2%, respectively.

“The revised fiscal consolidation path is modestly shallower than the previous roadmap, but does not fundamentally alter India’s overall fiscal strength,” says William Foster, Vice President-Senior Credit Officer at Moody’s.

The medium-term target to reduce the central government debt-to-GDP ratio to 40% is supportive of the sovereign credit profile, Foster said.

Moody’s in a statement said India’s budget for the fiscal year ending March 2019 strikes a balance between fiscal prudence and growth.

“Slight slippage in the budget deficit targets has no material impact on the country’s overall fiscal strength and is in line with Moody’s expectations,” it said.

The budget benefits corporates as well as infrastructure and insurance sectors, said Joy Rankothge, Vice President — Senior Analyst.

Moody’s expects that the government will meet next year’s deficit target, based on achievable budget assumptions and demonstrated the commitment to fiscal prudence.

“However, some ambitious revenue assumptions and uncertainty about some spending items could result in a shortfall to overall fiscal consolidation,” Moody’s said.

“The projected expenditure restraint and strong revenue growth are likely to be broadly achieved, although some measures such as the rule guiding increases in Minimum Support Prices (MSPs) and ambitious GST revenue targets could result in some further slippage,” Foster said.

The formal adoption — as stated by Finance Minister Arun Jaitley when he announced the budget — of key recommendations by the Fiscal Responsibility and Budget Management Committee (FRBM) as “credit positive”.

These include the objective to bring down the central government debt-to-GDP ratio to 40% (from about 50% today) and use of the fiscal deficit target as the government’s key operational parameter, Moody’s said.

For most of India’s corporates, the budget’s measures of higher rural spending, lower corporate taxes, and relaxing restrictions on the ability of financial intermediaries to invest in lower-rated corporate bonds are credit positive, it added.

The infrastructure sector will benefit from a boost in spending and the government’s continued focus on public investment will also help galvanise India’s upturn in capital spending, Moody’s said.

Finally, the insurance market will benefit from the launch of a national health scheme and the merger, as well as listing, of three state-owned insurers.

“The insurance, and in particular non-life market, is set to benefit from the growth prospects provided by the widening of universal health insurance cover,” it added.

PTI

Subscribe to our newsletter

You will get all our latest news and articles via email when you subscribe

The email despatches will be non-commercial in nature
Disputes, if any, subject to jurisdiction in New Delhi

Leave a Reply

Opinion

Karva Chauth: Faith, legend behind viewing the moon through a sieve

The legend and Karva Chauth rituals vary across Rajasthan, Uttar Pradesh, Himachal Pradesh, Madhya Pradesh, Haryana, Punjab, Delhi and, in south India, Andhra Pradesh

Pakistan-Occupied Kashmir, Here We Come!

Study Wuhan and Mamallapuram in the backdrop of the fact that things are not quite working out in China-Pakistan economic relations, notwithstanding the urge of the communist state to contain India and that of the Islamic state to challenge it

Slowdown Has Reasons Other Than GST, Demonetisation

When all economic sectors decline, the mood of the market turns sombre, turning investors all the more reluctant to pump in money; the interdependence of industries means that the slowdown suffered by one would affect many

Where China & India, Resisting & Improving Democracy, Meet

What you see in Hong Kong is China resisting democracy; what you see in Kashmir is India promoting it; a reasonably capitalist China does not offer freedom politically but India, held back at times by the choice of the people, is still opening up; there could be a point of convergence as the two nations move in opposite directions

Omega-3: Study published in BMJ claiming no benefit for type 2 diabetes has myopic vision

Most respondents in the omega-3 study published in the BMJ are from Europe and North America; such results can hardly be applied worldwide
- Advertisement -

Elsewhere

Pakistan-sponsored terrorists now sneaking into India are Afghan, Pashtun

A meeting attended by heads of Pakistan Army, ISI and terror outfits was held in Khyber Pakhtunkhwa of Pakistan where the plot was hatched

Manmohan Singh, is this your dissent or self-goal?

While the Congress is opposed to Veer Savarkar, Manmohan Singh tried today to not let the BJP take all the credit for recognising the freedom fighter

Pakistani F-16s chased Indian passenger plane in September

Two Pakistani F-16 aircraft tried to stop a SpiceJet aircraft on its way to Kabul carrying 120 passengers mid-air on 23 September

पाकिस्तान के साथ क्रिकेट संबंधों पर बोले सौरभ — मोदी, ख़ान तय करें

'पाकिस्तान के साथ खेलने के लिए हमें अनुमति लेनी होगी; अंतर्राष्ट्रीय दौरे सरकारों की अनुमति से होते हैं; हमारे पास इस सवाल का जवाब नहीं है'

Malaysia wants to import more from India after adverse comment on Kashmir

Mahathir Mohamad has always been supportive of Pakistan; India-Malaysia relations had improved after he was out of power in 2003

You might also likeRELATED
Recommended to you

%d bloggers like this: