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.
The third T20 match played between India and New Zealand in Napier on Tuesday was a tie. With thi
new Delhi. By looking at the documents of BiteDance, the parent company of Tiktok, it is revealed
In IPL 2025, a match was played between Lucknow Super Giants and Sunrisers Hyderabad on Monday. I
Now only one day is left for the nomination of Congress President. The suspense about the preside
Bharat Jodo Yatra in Uttar Pradesh is to begin on January 3. Just a day before this, Rahul Gandhi
Just a few days ago, some unknown people tried to enter the residence of Bollywood veteran actor
UP Elections: Will the equation change due to Ram Mandir and Owaisi in Bundelkhand?
The agitation for the assembly elections in Uttar Pradesh has started. All the political parties
GAGAN to save lives at unmanned Railway Crossings
Chennai, Feb 26 (IANS) The Indian Railways is in talks with the Indian space agency on the poss
Bollywood's famous film director and producer Karan Johar is often in the headlines for his parti
Prime Minister Narendra Modi said on Monday that contract farming has already been done in our co
