Budget 2018: Day after budget Fitch warns India on its high debt burden

Budget 2018: Just day after Finance Minister Arun Jaitley presented budget 2018 in the Parliament, ratings agency Fitch has warned India saying that its high debt burden plays obstacle to rating upgrade. On the budget day Arun Jaitley had said in his speech that IMF has made forecast in its latest update that India will grow at 7.4 percent next year.

Written by FE News Desk

Updated: February 2, 2018 13:28 IST

Budget 2018: Presenting the Budget for FY19 in Parliament on Thursday, finance minister Arun Jaitley put the spotlight on rural India, agriculture and job creation, projected a jump in revenue buoyancy thanks primarily to a stabilising goods and services tax (GST), but still took a pause on fiscal consolidation.

Budget 2018: Just day after Finance Minister Arun Jaitley presented budget 2018 in the Parliament, ratings agency Fitch has warned India saying that its high debt burden plays obstacle to rating upgrade. On the budget day Arun Jaitley had said in his speech that IMF has made forecast in its latest update that India will grow at 7.4 percent next year. In budget 2018, Arun Jaitley had projected India will clock 3.5 percent fiscal deficit against the target of 3.2 percent set earlier.

Fitch also said that if the proposals and policy measures are implemented properly a large part of the population can get benefitted. The budget 2018 presented by Finance Minister Arun Jaitley on Thursday was the first one after the implementation of goods and services tax and the last one before the upcoming general election scheduled in 2019.

Know how Arun Jaitley’s Budget 2018 will impact your tax liability with this Income Tax Calculator

Fitch also said that given India’s high government debt burden of 68 percent of GDP and a large fiscal balance of 6.5 percent of GDP and weak public finances if states included, chances of India’s sovereign ratings get constrained. The budget has announced fiscal deficit of 3.5 percent of GDP in the running year ending March, higher than higher than 3.2 percent targeted earlier.

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In budget 2018, Finance Minister Arun Jaitley allocated large sum to the healthcare, agriculture and rural sector of the economy. “ The budget is tremendous in terms of allocation made to the healthcare sector. Budget promises tremendous things for healthcare especially insuring such a large part of population under medical cover,” said Naresh Trehan of Medanta.

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Since many big change were already made some months ago, it was unlikely to see much talk or direction on anything to do with GST in Budget 2018, said many industry leaders.