India’s gross domestic product (GDP) growth recovery will help in increasing tax revenues and capital inflows, but high fiscal deficit and inflation numbers presented limited chances of an upward revision in the country’s sovereign ratings, global ratings agency Moody’s said in a report on Wednesday.
“India’s macroeconomic outlook will improve if, as we expect, the authorities implement policies that ease inflationary pressures and increase infrastructure invest- ment,” Moody’s said. “Nonetheless, we forecast India’s fiscal, inflation and infrastructure metrics to remain weaker than the median for similarly rated peers,” it said.
The comments come days after the government released the first quarter GDP growth numbers at 5.7%, the highest in nine quarters, and the current account deficit at 1.7% of GDP, compared with a CAD of 4.8% for the first quarter of FY14. Finance minister Arun Jaitley has stuck to the FY15 fiscal deficit target of 4.1% of GDP set by his predecessor P Chidambaram.