Mumbai, Feb 28 (IANS) The sovereign credit rating implications of the first full budget of the Prime Minister Narendra Modi's government depends on increased production and improved India's international competitiveness, said credit rating agency Moody's Investors Service Friday.
Reacting to the union budget 2015-16 presented by Finance Minister Arun Jaitley, Moody's sovereign analyst Atsi Sheth, Sovereign Risk Group, told IANS: "The sovereign credit implications of the budget will depend on whether the choice to growth over fiscal consolidation leads to more productive growth and improves India's international competitiveness."
Moody's rates India at "Baa3", the lowest investment grade rating, with a "stable" outlook, in line with the ratings of other agencies like Standard & Poor's and Fitch Ratings.
"The budget underscores our view that government finances are likely to remain a constraint on India's sovereign credit profile: fiscal consolidation appears difficult to achieve even by a government with a considerable parliamentary majority and during a period of accelerating economic growth," Sheth said.
"From our perspective, even if the central government's deficit fell to three percent of GDP (gross domestic product), India's general (state + central) government fiscal deficit would remain well above that of most countries we rate," Sheth added.
According to Sheth, the decision to reduce the fiscal deficit to three percent of GDP over three years, instead of two as proposed in July 2014, does not come as a surprise.
The measures in the budget will support consumption and investment growth. But this support to growth comes at a fiscal cost and the government's fiscal position remains weak, relative to similarly rated sovereigns.
Simplification of the corporate tax system (reduction in basic rate, removal of exemptions) and clarity on GAAR could benefit private investment.
"We see the introduction of the GST (Goods and Services Tax) and proposed direct cash subsidy transfer as measures that could have credit positive implications -- although the benefits are several years away," Sheth said.
According to Sheth, the implementation of a direct cash subsidy transfer system may be similarly transformative, if it achieves its goal of eliminating subsidy leakages.
"This will have welfare and efficiency benefits, and while it won't reduce subsidy expenditure, it could reduce the increase in subsidy expenditure, which has been a major contributor to widening fiscal deficits in the past," Sheth added.
Flood News: After heavy rains, flood-hit many states including Gujarat, Odisha, train services affected
After the floods caused by heavy rains in many areas of North India, now the situation has become worrying due to rains in many more states of the country. Four people have lost their lives in the
How did the government make the tax system better, Prime Minister Narendra Modi explained
Prime Minister Narendra Modi on Thursday launched the 'Transparent Taxation - Respect for the Honorable' platform to further improve the tax system. It is considered an important step towards tax
Bhai Dooj 2022: Indian Army jawans also celebrated the festival of Bhai Dooj in Jammu and Kashmir
The festival of Bhai Dooj is being celebrated with great pomp across the country. On this day sisters apply tilak to their brother and pray for his long life. At the same time, the soldiers engaged
Delhi will get 500 train coaches
In view of the increasing cases of Covid-19 in the national capital, the central and Delhi government announced several steps to increase health services today. Union Home Minister Amit Shah held a
Out of the team if Corona happened: BCCI players bluntly, said- whoever can escape from Covid, only he will go on England tour
The Board of Control for Cricket in India (BCCI) has given strict instructions to the players visiting England. The board has said that if a player comes positive before leaving for England, he will
Hamare Baarah: 'Humare Baarah' is ready for release as soon as it gets relief from the Bombay High Court, and will hit the theatres on this day
The Supreme Court stayed the release of Annu Kapoor's film 'Humare Barah'. The film, which was to be released in theaters on June 7, was mired in controversy for its bold story and depiction of the
Two years later, China granted visas to over 1,300 Indian students, but direct flights unlikely
China has issued visas to more than 1300 Indian students after a two-year break due to the Corona epidemic. Strict Kovid-19 restrictions have been in place in China since the beginning of the
Teachers Day: These stars were teachers before coming into the world of acting, many big stars are on the list
Many stars who have shown their performance in the film world have also served in other fields before stepping into this dazzling world. Some left their engineering jobs and came here to fulfill their
Ashes: Controversy between Smith and Bairstow did not stop, then Kangaroo batsman became a victim of criticism from the English crowd
Steve Smith's controversial run-out decision in Ashes 2023: In Ashes 2023, another decision of the third umpire became a topic of discussion. Steve Smith narrowly escaped a run-out on the second day
Why is America threatening Saudi Arabia with consequences? because of this fury
Saudi Arabia, one of the closest countries to America, seems to be taking its path. There could be significant changes in relations between Saudi Arabia and the US. A section of US lawmakers wants to
