Budget credit positive for India Inc, fiscal challenges remain: Moody's

The path toward the government's medium-term deficit target of 4.5% of GDP by FY25 remains undefined.

Rating agency Moody’s said the government’s Budget for FY 2022-23, with emphasis on capital expenditure to support growth, is credit positive for non-financial companies, financial institutions, but poses long-term fiscal challenges for the sovereign.

There is continued emphasis on rising capital expenditure to sustain growth momentum near term, as the economy continues to rebound from its coronavirus (Covid-19) pandemic trough, the rating agency said in a report. India’s sovereign rating is "Baa3 stable".

The conservative Budget assumptions leave room for the government to respond to prevailing macroeconomic and pandemic risks over the next year. However, the path toward the government’s