‘Sov­er­eign rat­ing pro­file to be based on post-poll Bud­get’

Bud­get will of­fer guid­ance on medium-term out­look: Fitch


Pre-elec­tion spend­ing has led to fis­cal slip­page by a mod­est mar­gin but the sov­er­eign rat­ing pro­file of In­dia would be eval­u­ated based on the medium term out­look in the post-elec­tion Bud­get, Fitch Rat­ings said.

Fi­nance Min­is­ter Piyush Goyal on Fri­day pre­sented the In­terim Bud­get for 201920 in which he an­nounced a scheme un­der which farm­ers hold­ing up to two hectare of land would get ₹6,000 in an­nual pay­out — a move in­tended to ben­e­fit about 12 crore farm­ers.

Fis­cal slip­page

How­ever, there was a 0.1% slip­page in the fis­cal deficit es­ti­mate for the cur­rent fis­cal. It was re­vised to 3.4% from the bud­geted 3.3%. For the next fis­cal, fis­cal deficit has been pegged at 3.4% of GDP, up from 3.1% as per the fis­cal con­sol­i­da­tion roadmap out­lined ear­lier.

Fitch Rat­ings head of Asi­aPa­cific Sov­er­eigns, Stephen Schwartz, said the In­terim Bud­get was largely as an­tic­i­pated, with pre-elec­tion spend­ing pres­sures giv­ing rise to a sec­ond con­sec­u­tive year of fis­cal slip­page by a mod­est mar­gin, thereby de­lay­ing plans to re­duce the high gen­eral fis­cal deficit and debt bur­den.

“Longer term fis­cal trends are more im­por­tant to the sov­er­eign rat­ing pro­file, and we will eval­u­ate these in the con­text of the post-elec­tion Bud­get, which should pro­vide ad­di­tional guid­ance on the medium-term out­look,” he said. In Novem­ber last year, Fitch had re­tained sov­er­eign rat­ing for the coun­try at ‘BBB-’, the low­est in­vest­ment grade, with a sta­ble out­look.

Fitch said a weak fis­cal po­si­tion con­tin­ues to con­strain rat­ings and there were sig­nif­i­cant risks to macroe­co­nomic out­look.

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