The Centre's fiscal deficit may increase by one per cent over the interim Budget projections to reach 6.5 per cent of GDP due to possible stimulus measures in the full Budget to be presented next month, S&P said.
"We think there is a possibility that India’s fiscal deficits would increase by 1 percentage point of GDP, from the level expected by the interim budget," Standard and Poor's sovereign rating director TK Ogawa told PTI.
He attributed this to the Finance Minister Pranab Mukherjee's statement in the interim Budget that the next government may have further stimulus measures, which could be 0.5-1 per cent of the size of the GDP.
Earlier in February this year, S&P warned that India's ratings could be downgraded to junk grade if its fiscal deficit widens significantly.
The rating agency said that the single largest negative factor to affect the sovereign ratings on India is the large size of fiscal deficit of the government and S&P would pay attention to the contents of the full Budget.
Ogawa further said that it is also important whether and at which pace the government will plan the divestment of the state-owned companies.
