You are here: Home » Economy & Policy » News
Business Standard

Global rating agencies rule out upgrade for India within a year

After the Budget, Moody's, CRISIL & CARE Ratings had red-flagged the country's delayed fiscal consolidation road map

Press Trust of India  |  New Delhi 

Global rating agency Standard & Poor’s (S&P) on Monday ruled out a rating upgrade for India within a year while Fitch said the government’s fiscal consolidation strategy spelt out in Budget is “less aspiring” than in the past.

After the Budget, Moody’s, CRISIL and CARE Ratings had red-flagged the country’s delayed fiscal consolidation road map..

Read our full coverage on Union Budget S&P’s Senior Director (Asia-Pacific Sovereign Ratings) Kim Eng Tan said: “In terms of the structural effects of the Budget, we see the improvement has been not as great as it could have been... We don’t see the rating going up in the next year or so.”

Fitch Ratings said while the Budget shows the government’s continued orientation on implementation of structural reforms, it could have been more ambitious on the fiscal front, especially given India’s high public debt burden.

“The medium-term fiscal consolidation strategy is less aspiring than in the past, which is negative from a sovereign rating perspective,” Fitch said.

Rolling out a new fiscal consolidation road map, Finance Minister Arun Jaitley had said in the Budget that fiscal deficit would be brought down to 3.9 per cent of gross domestic product in 2015-16, and then further to 3.6 per cent and finally to three per cent by 2016-17 and 2017-18, respectively.

The finance minister had said the government would achieve the three per cent fiscal deficit target by 2017-18 as against 2016-17 as it intended to increase public investment to boost growth. Moody’s said the Budget had prioritised growth over fiscal consolidation but it may not have any impact on the country’s sovereign rating.

"The dilution of an already modest deficit reduction plan underscores its view that India's structural constraints, such as a low tax revenue base and rigidity in expenditures, make fiscal consolidation difficult...," Moody's said.

The Budget prioritises growth over fiscal consolidation, Moody's said, adding that it was "unlikely to materially change" a rating constrained by "weak fiscal metrics".

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, March 03 2015. 00:21 IST