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ASIA
ECONOMY | Staff Reporter, India
Published: 27 Feb 12
986 views


All eyes on new India budget

Will it focus on growing revenues or slashing expenditures to correct its weakening fiscal position?

The Indian government has been careful with its fiscal deficits in recent years, said Fitch in a new report, and it is not about to stop now. There is now a growing anticipation on how budget officials will consolidate public financing even further for the FY13 budget before it is unveiled next month.

"Pressure is mounting on India's public finances, one of the sovereign's key rating weaknesses, due to recent deterioration in the central government's fiscal position. However, it is premature to conclude that India's overall general government debt dynamics, which have improved in recent years, have suddenly reversed course and become unsustainable," Fitch said.

"Despite the recent poor performance, Fitch believes that the central government's fiscal deficit is unlikely to miss its target by a significant margin, finishing FY12 at about 5.5%-6% of GDP. The broader general government (including both central government and the states) could be about 9.5% of GDP, compared with 9.2% in FY11. India is unlikely to experience a repeat of the blowout of public finances as in FY09," it added.

"The upcoming FY13 Union budget in mid-March will provide further evidence of the Indian authorities' commitment to fiscal consolidation. "Beyond the fiscal deficit targets that will be announced, it will be interesting to see if any new measures to enhance revenue intake or cut expenditure are introduced to improve the underlying structure of India's public finances," says Art Woo, Director in Fitch's Sovereign team," it said further.



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Tags: India FY13 buget, India fiscal consolidation, Fitch on India FY13 budget

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