Slower Consolidation to Constrain India's Fiscal Strength Over Medium Term: Moody's
3 years, 10 months ago

Slower Consolidation to Constrain India's Fiscal Strength Over Medium Term: Moody's

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Rating agency Moody’s on Wednesday India’s fiscal deficit projections are higher than expected and slower consolidation will constrain its fiscal strength over the medium term. The US-based agency said it expects India’s nominal GDP growth to rise to closer to 17 per cent in fiscal 2021, higher than 14.4 per cent projected in the Budget. The budget’s focus on higher capital spending, financial sector reform and asset sales will help stimulate growth, but implementation risks remain and slower fiscal consolidation will constrain fiscal strength over the medium term,” Foster added. In the note titled ‘India’s budget to drive broad economic growth, but fiscal consolidation prospects remain weak’, Moody’s said “the government’s relatively conservative nominal GDP growth assumption of 14.4 per cent for fiscal 2021 creates potential for stronger fiscal outcomes than it currently forecasts.

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