Fitch says Budget light on new structural reforms

?Finance Minister Nirmala Sitharaman's Budget for 2020-21was light on new structural reforms, Fitch Ratings said on Wednesday adding ?it has notmaterially altered its forecasts for India's economic growth to rise to 5.6 per cent in the next fiscal from 4.6 per cent in 2019-20.

"We believe it is highly unlikely the country's general government debt will be brought within the ceiling of 60 per cent of GDP by FY25, as stipulated in the Fiscal Responsibility and Budget Management Act," it said.

Fitch projected that the government debt will remain close to 70 per cent of GDP throughout the period to 2021-22.

"India's high public debt levels are a weakness relative to its rating peers (the BBB median stood at 41.1 per cent in 2019)," it said.

The Union Budget 2020-21 implies a modest degree of slippage from previous targets to consolidate public finances, it said. "However, its contents are consistent with our expectations when we affirmed the country's sovereign rating at 'BBB-'/Stable in December 2019.?"
"However, risks are likely skewed towards the downside, particularly for revenues in light of previously announced cuts in the corporate income tax rate and newly unveiled income tax rate reductions."