Global rating agency Fitch said in a release on Tuesday that India’s 2025 Union Budget reflects the government’s intentions to stay on the path of gradual but stable deficit.
“We see the goals of the government’s moderate-term debt reduction as a positive development, which if followed, can improve the credit profile over time and eventually upwards on India’s rating Can put pressure, “said this.
The government aims to maintain the debt of the central government on a gradual below trend, reaching around 50% of the GDP by FY 2031, is about 7 percent less than the financial year 2025. Focusing on medium -term loan targets should be given more flexibility. Depending on economic conditions, manage the fiscal deficit, Fitch said.
“We believe that such a route would require fiscal deficit under or just below the target of 4.4% GDP deficit in FY 26,” Fitch said. This will mean losses on the balance of the general government-which includes states and it is important for sovereign ratings-about 7% of GDP and financial range in low-70% range of GDP by 2031.
Fitch warned, “It can be difficult to achieve these goals if nominal GDP growth also slips 1 percent point below our 10.5% medium -term perception,” Fitch warned.
While the estimates made in the budget appear realistic, there is a risk of slight slippery in revenue collection targets between moderation recently in economic development.
On development, the budget will be roughly neutral, Fitch said, 6.4% GDP growth for fiscal 2025 and 6.5% increase for FY 2026. “Tax cuts can promote a minor consumption, and we hope that the government’s capex will remain relatively high, remain relatively higher. But overall, the fiscal deficit decrease is likely to have little contractions. , “The note explained.
Fichel Matrix remains weak, with the loss of the general government, the loan and debt service is well cumbersome over all the companions, Fitch said. The income tax deduction of the budget will make it difficult to increase the revenue/GDP ratio, which is low, and it is not clear how sustainable revenue support from the central bank dividend will be.
Moody also said that although the Government of India is on track to meet near-term policy goals, the rating agency does not expect a sufficient improvement in the loan burden. It is also not expecting India’s fiscal strength to be weaker than its investment-grade peers to change its comprehensive evaluation.
(Tagstotransite) Budget 2025
