Moody's analyst says India's budget "fiscally prudent", reforms key

MUMBAI (Reuters) - India's 2017/18 annual budget is "fiscally prudent," as it maintains the government's fiscal consolidation efforts and would lead to stable economic growth if implemented correctly, a Moody's analyst said on Wednesday.

However, the ratings agency would still need to see more evidence of the effectiveness of reforms to justify a change in its ratings stance, said Marie Diron, associate managing director of the sovereign rating group at Moody's Investors Service.

On Wednesday, Finance Minister Arun Jaitley presented a budget for the fiscal year beginning April 1 that increased spending on rural areas, infrastructure and fighting poverty, but keeping fiscal deficits in check.

"It is a fiscally prudent budget," Diron said in a phone interview.

"What would potentially lead to an upgrade would be evidence that these reforms that are being implemented are becoming gradually more effective in ensuring a stable and growth environment, and hence lower debt than currently."

Moody's rates India at "Baa3", or its lowest-investment grade, with a "positive" outlook.

(Reporting by Rafael Nam and Suvashree Dey Choudhury; Editing by Richard Borsuk)