India’s credit rating depends on policies of new govt; Moody’s explains how

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Published: May 23, 2019 5:33:58 PM

India's credit rating will depend  on the policies of the new government, Moody's said Thursday and expressed hope that the country would continue with its fiscal consolidation plan.

India?s credit rating will depend  on the policies of the new government, Moody?s said Thursday

India’s credit rating will depend  on the policies of the new government, Moody’s said Thursday and expressed hope that the country would continue with its fiscal consolidation plan. “Any credit implications of the outcome of India’s general election will be determined by the policies adopted by the government in the next few years. These policies are yet to be formulated,” Moody’s Investors Service VP Sovereign Risk Group William Foster said. Moody’s expects the broad push towards fiscal consolidation to remain, although with greater policy emphasis on supporting low incomes, Foster added.

As per the trend, BJP-led NDA will form the government at the Centre for the second successive term with absolute majority. In 2017, the US-based rating agency upped India’s rating to ‘Baa2’ from ‘Baa3’, changing outlook to ‘stable’ from ‘positive’, and said reforms would help stabilise rising levels of debt.

Deviating from the fiscal consolidation path as per the Fiscal Responsibility and Budget Management (FRBM) Act, the government in February’s interim budget pegged the fiscal deficit for 2019-20 at 3.4 per cent of GDP, as against the original target of 3.1 per cent. In 2018-19, the fiscal deficit was 3.4 per cent of GDP.

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