Jaitley's 'less aspiring' fiscal consolidation strategy negative for ratings: Fitch

Says the medium-term fiscal consolidation strategy is less aspiring than in the past

The Budget could have been more ambitious on the fiscal front, especially given a high public debt burden, and the less aspiring fiscal consolidation strategy is negative for ratings, an analyst at Fitch Ratings said on Monday.

Finance Minister Arun Jaitley on Saturday announced a Budget that put boosting growth before painful reforms, slowing the pace of fiscal deficit cuts and seeking to put domestic and foreign capital to work.

"The medium-term fiscal consolidation strategy is less aspiring than in the past, which is negative from a sovereign rating perspective," Thomas Rookmaaker, director at Fitch's Asia-Pacific Sovereign Group wrote in an email.

"If disinvestment would be treated as a 'below the line' financing item, as is international best practice, instead of a revenue item, the fiscal deficit would actually rise from 4.3% in FY15 to 4.4% in FY16," he added.