Days ahead of the Union Budget, Moody’s Investors Service on Tuesday said India’s fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation roadmap.
Moody’s said the importance of the upcoming Budget lies in its message on the government’s fiscal consolidation plans. The government’s fiscal deficits have reduced over the last five years, and this has supported the stabilisation of government debt ratios.
Without fiscal consolidation going forward, India’s government finances will continue to compare poorly to peers.
Even if budgetary consolidation continues, India’s fiscal metrics will remain weaker than rating peers in the near term, because of the relatively high level of India’s state and central government deficits and debt.Moody’s
A Livemint report suggests that the government’s fiscal assumptions in the Budget is fraught with hurdles. An expenditure rise is on the anvil even as the government stares at a weaker revenue mobilization in the next fiscal year because of poor performance of Indian companies. The downside risks to the global economy, too, have increased.
Finance minister Arun Jaitley’s efforts to boost public investment will come at a time when he also has to significantly increase revenue expenditure for the implementation of One Rank One Pension scheme for defence personnel and Seventh Pay Commission.
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