Time for govt to roll back stimulus: Moody's

Global rating agency Moody's today said large stimulus package provided by the government to perk up the economy and the consequent recovery has set the stage for it to roll back the measures.

The rating agency further said any revision in the country's sovereign rating will depend on the precise nature of the government's fiscal consolidation programme, which was hit hard by the slew of stimulus measures.

"...The government's large fiscal stimulus programme and strong growth response have set the stage for a successful exit strategy, thereby leading potentially to a deceleration in its fiscal financing requirements," Moody's said.

Moody's said this in a statement on upgrading outlook on rupee-denominated government bonds.

 

The government had cut excise duty by 6 per cent, service tax by 2 per cent, besides stepping up plan expenditure to spur the slowing economy, which resulted in widening of fiscal deficit, projected at 6.8 per cent of GDP this fiscal.

However, this has given a push to the economy, with GDP growth posting a stunning numbers at 7.9 per cent during the second quarter of this fiscal.

Moody's sovereign analyst for India, Aninda Mitra said, "The structure of the Indian economy is robust, and cyclical trends are strong and sustainable."