Ratings agencies should see India bettered fiscal consolidation target: FM

After announcing the interim budget, Finance Minister Nirmala Sitharaman today said ratings agencies should take on board the fact that India not only adhered to the fiscal consolidation roadmap, it actually bettered it.

The interim budget today revised the fiscal deficit for the current financial year to 5.8% of GDP, compared with the earlier estimate of 5.9%. For FY25, the government has pegged the fiscal deficit at 5.8%.  

Asked about her message to the ratings agencies, Sitharaman said, “We have not only aligned with the fiscal roadmap we gave earlier, but we have bettered it, is the simple, straight forward message, which the ratings agencies should take on board.”

“We continue on the path of fiscal consolidation, as announced in my Budget Speech for 2021-22, to reduce the fiscal deficit below 4.5% by 2025-26. The fiscal deficit in 2024-25 is estimated to be 5.1% of GDP, adhering to that path,” FM says in the budget speech.

 “The interim budget for 2024-25 accords the highest priority to restoring fiscal consolidation. The Budget shows the reduction in the fiscal deficit to GDP ratio by 60, 70, and 60 basis points in three consecutive years so as to reach 4.5% of GDP by 2025-26,” says D.K. Srivastava, Chief Policy Advisor, EY India.

“The gross and net market borrowings through dated securities during 2024-25 are estimated at ₹14.13 and ₹11.75 lakh crore, respectively. Both will be less than that in 2023-24. Now that the private investments are happening at scale, the lower borrowings by the Central Government will facilitate larger availability of credit for the private sector,” FM says in the speech.