SME Times is powered by   
Search News
Just in:   • SpiceJet re-introduces 'Zero Change fee' offer  • 'Good' progress made at nuclear talks but issues remain: Iran  • Fiscal package may be on cards to maintain economic recovery amid Covid 2.0  • Striking taxi drivers demands unreasonable: Goa tourism body  • Govt notifies Rs 6k cr PLI scheme for AC, LED light manufacturing 
Last updated: 25 Feb, 2021  

India.Growth.9.Thmb.jpg India's fiscal position to remain weak: Moody's

GDP.9.jpg
   Top Stories
» Fiscal package may be on cards to maintain economic recovery amid Covid 2.0
» FICCI writes to 25 CMs on Covid management
» Regulation of insolvent firms' shares still remains a dilemma
» ECLGS 2.0 now covers SMA-1 borrowers
» Forex reserves up by over $4 bn
SME Times News Bureau | 25 Feb, 2021
Moody's Investors Service says that India's (Baa3 negative) weak fiscal position will remain a key credit challenge in 2021.

According to Moody's, the prospects for fiscal consolidation remain weak particularly given the government's mixed track record of implementing revenue-raising measures.

Although the government has not provided an explicit medium-term fiscal consolidation road map, according to its Budget speech it targets a fiscal deficit of 4.5 per cent of GDP by fiscal 2026, which amounts to an average annual deficit reduction of about 0.5 per cent of GDP over four years.

Given India's very high debt burden, this gradual pace of consolidation will prevent any material strengthening in the government's fiscal position over the medium term, unless nominal GDP growth picks up sustainably to reach much higher rates than historically recorded, Moody's said.

According to Moody's, the central government's fiscal deficit for fiscal 2021 and fiscal 2022 should be lower than projected, supported by stronger revenue generation in the fourth quarter of fiscal 2021 and higher nominal GDP growth in fiscal 2022.

"Still, wide fiscal deficits combined with lower real and nominal GDP growth over the medium term will constrain the government's ability to reduce its debt burden," says Gene Fang, a Moody's Associate Managing Director.

Moody's Indian affiliate, ICRA Limited, meanwhile, says it expects a considerable rebound in India's economic growth in the fiscal year ending March 31, 2022 (fiscal 2022) on the back of higher central government spending, and a pickup, albeit uneven, in consumption.

Overall, ICRA projects that real and nominal GDP will rise 10.5 per cent and 14.5 per cent, respectively, for fiscal 2022 as the pandemic recedes.

According to ICRA, recent economic data signal a broadening of the economic rebound in the third quarter of fiscal 2021, with most tracked indicators recording improvements from the year-ago period. Data for the current quarter also suggest a stable economic momentum.

Meanwhile, near-term prospects for the agricultural sector are bright, in ICRA's assessment, with many regions recording healthy precipitation and reservoir levels, increasing acreage of Rabi crops and healthy procurement trends.

ICRA expects that the consumption recovery will be differentiated across age and income groups in fiscal 2022. Pent-up demand for discretionary activities like travel could lead higher income groups to spend more on recreation after Q2 FY2022 once vaccines are more widely distributed. This would provide a back-ended boost to economic activity in the second half of fiscal 2022 and fiscal 2023.
 
Print the Page
Add to Favorite
 
Share this on :
 

Please comment on this story:
 
Subject :
Message:
(Maximum 1500 characters)  Characters left 1500
Your name:
 

 
  Customs Exchange Rates
Currency Import Export
US Dollar
66.20
64.50
UK Pound
87.50
84.65
Euro
78.25
75.65
Japanese Yen 58.85 56.85
As on 18 Apr, 2021
  Daily Poll
COVID-19 has directly affected your business
 Yes
 No
 Can't say
  Commented Stories
» Covid second wave: Lockdown or no lockdown(2)
 
 
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter