Global ratings agency Moody’s projected India’s nominal growth at 17% for the coming fiscal, a mark up from the 14.3% earlier, based on the “pro-growth” budget, but highlighted the weak prospects of fiscal consolidation.
“The budget's focus on higher capital expenditure, financial sector reforms and asset sales will help to stimulate growth and supply broad-based credit support,” it said in a report on Wednesday.
The larger-than-expected deficit projections reflected both credible budgetary assumptions and greater transparency, but the government's weak fiscal position is likely to remain a key credit challenge, Moody’s said.
The budget forecast nominal GDP growth at 14.4%.
The agency had pegged India’s fiscal deficit for the current fiscal at 7.5% of GDP and 5.5% for the next fiscal, while the budget put the figures at 9.5% and 6.8% for FY21 and FY22, respectively.