City
Epaper

India to face fiscal challenges despite lower deficit target: Moody's

By IANS | Updated: July 9, 2019 19:10 IST

Credit rating agency Moody's Investors Service on Tuesday said that India continues to face fiscal challenges, despite lower deficit target in the full Budget 2019-20.

Open in App

In its analysis of the full Budget 2019-20, Moody's said that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign credit quality.

"Simultaneously delivering on fiscal consolidation and raising incomes will be extremely challenging for India's authorities, particularly since growth is likely to remain weak over the coming year," the credit rating agency said.

The full Budget presented on July 5 targeted a slightly lower deficit of 3.3 per cent of the GDP for fiscal 2019 than what the authorities had predicted in February.

As per the report, budget announcements for public sector banks, non-bank finance companies (NBFCs), the infrastructure sector, property developers, some domestic producers and securitization transactions are credit positive.

Specifically, the report pointed out the Rs 70,000 crore ($10.2 billion) capital infusion into public sector banks and a temporary credit guarantee facility to alleviate tight liquidity for NBFCs as credit-positive for the relevant entities and "should encourage the flow of credit to the economy and support growth".

"The hike in customs duties on certain imported products will increase the competitiveness of domestic producers, while new incentives for the purchase of affordable homes will be credit positive for Indian property developers," the agency said.

"And, plans to increase public spending on infrastructure and expand funding sources to these companies are credit positive for the sector."

As for the funding support and regulatory strengthening for the NBFC sector, the report elaborated that such measures are credit positive for Indian securitization deals.

"However, any reductions in the government's stakes in oil companies could lower Moody's assessment of official support for these firms, a credit negative for the sector," the report said.

( With inputs from IANS )

Open in App

Related Stories

TechnologyGenAI enabling Indian creators to transcend traditional mediums: Adobe CEO

EntertainmentKalki Koechlin on how films like ‘Taare Zameen Par’ shape awareness

BusinessGenAI enabling Indian creators to transcend traditional mediums: Adobe CEO

EntertainmentShoojit Sircar: For me, 'Piku' is really one of the finest performances of Big B

EntertainmentTom Cruise’s secret to preparing for stunts: A massive breakfast

कारोबार Realted Stories

BusinessSensex, Nifty trade in green amid positive global cues

BusinessNifty surges 120 points, Sensex gains 520 points amid positive global cues, Indian markets holding back due to border tension

BusinessApple clocks quarterly record in India, new retail stores coming this year: Tim Cook

BusinessMutual Fund industry sees Rs 25,000 Cr net inflow in Q4 FY25, equity leads the surge: Report

BusinessPiyush Goyal holds trade talks with EU Commissioner, India-EU reaffirm to conclude FTA by end of 2025