In May, the RBI board approved a dividend of Rs 2.11 trillion to the government for the fiscal year 2023-24.
India remains committed to reducing its budget deficit over the medium term, despite its focus on higher public capital spending and demands from the coalition government, Fitch Ratings said on Tuesday.
In a report, it said India has met or exceeded its budget deficit targets in recent years, thereby enhancing its fiscal credibility.
Fitch said India’s use of the RBI dividend to reduce its fiscal deficit target for the fiscal year ending March 2025 reinforces its view that the country prefers fiscal consolidation to additional spending.
Still, India’s deficit and interest-income and debt ratios remain high compared to its ‘BBB’-rated sovereign peers, Fitch said.
“…we believe that the government (India) remains committed to reducing the budget deficit over the medium term, even amid the demands that governing in coalition will place on the newly elected administration, and despite the government’s sustained focus on supporting economic growth through increased public capital spending,” the rating agency said.
In the full Budget presented in July, the government lowered the fiscal deficit target to 4.9 percent for the current financial year, down from 5.1 percent estimated in the February interim Budget.
In May, the RBI board approved a dividend of Rs 2.11 trillion to the government for the fiscal year 2023-24.
Last month, Fitch Ratings affirmed India’s sovereign rating at ‘BBB-‘ with a stable outlook, citing a solid medium-term growth outlook and a robust external financing position.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 10, 2024 | 18:28 IS
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