Ahead of Budget, Moody's red-flags fiscal worries

February 23, 2016 12:26

Days ahead of the Union Budget, Moody's Investors Service today said India's fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation road map.

Jaitley in his Budget for 2016-17 on Monday will reveal if the credit-positive five-year trend of narrowing budget deficits -- from 6.5 per cent of GDP in fiscal 2010 to 4.1 per cent in 2014-15 -- will continue.

He will also say if the government was on track to reduce deficits to 3.9 per cent and 3.5 per cent of GDP this fiscal year and the next respectively.

Moody's said the importance of the upcoming budget lies in its message on the government's fiscal consolidation plans. The government's fiscal deficits have reduced over the last five years, and this has supported the stabilisation of government debt ratios.

Without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers.

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