India’s ‘less aspiring’ fiscal consolidation strategy negative for ratings: Fitch

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Mumbai | Published: March 2, 2015 12:08:04 PM

Finance Minister Arun Jaitley has announced a budget that put boosting growth before painful reforms, slowing the pace of fiscal deficit cuts...

Union Budget 2015, Arun Jaitley, Fiscal deficitFinance Minister Arun Jaitley addressing the post annual budget press conference in New Delhi. Jaitley has announced a budget that put boosting growth before painful reforms, slowing the pace of fiscal deficit cuts. (PTI)

India’s budget could have been more ambitions on the fiscal front, especially given a high public debt burden, and the less aspiring fiscal consolidation strategy is negative for ratings, an analyst at Fitch Ratings said on Monday.

Finance Minister Arun Jaitley on Saturday announced a budget that put boosting growth before painful reforms, slowing the pace of fiscal deficit cuts and seeking to put domestic and foreign capital to work.

“The medium-term fiscal consolidation strategy is less aspiring than in the past, which is negative from a sovereign rating perspective,” Thomas Rookmaaker, director at Fitch’s Asia-Pacific Sovereign Group wrote in an email.

“If disinvestment would be treated as a “below the line” financing item, as is international best practice, instead of a revenue item, the fiscal deficit would actually rise from 4.3 per cent in FY15 to 4.4 per cent in FY16,” he added.

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