Budget realistic positive for ratings Moodys
Delhi: Raising hopes of a sovereign credit upgrade, global rating
agency Moody's on Monday applauded finance minister P Chidambaram's budget
saying that it pursues realistic fiscal consolidation path and is 'credit
"India's budget pursues realistic fiscal consolidation, a credit positive
for the sovereign", said Moody's in its credit outlook for the country.
Chidambaram in his budget for 2013-14 proposed to bring down the fiscal
deficit to 4.8 per cent of the Gross Domestic Product (GDP) from 5.2 per
cent in the revised estimates for the current financial year.
"This plan of modest fiscal consolidation is credit positive for the
sovereign because, against a backdrop of subdued GDP growth and upcoming
elections, it is a realistic effort to correct India's macroeconomic
imbalances", the rating agency said.
Earlier, ratings agencies like Standard and Poor's and Fitch had threated
to downgrade India's sovereign credit rating to junk grade in view of the
worsening fiscal position of the government. They also are likely to come
out with fresh assessment in the backdrop of the Budget proposals.
Moody's had assigned BAA3 rating to India, which indicates investment
grade rating with stable outlook.
The report further said that fiscal consolidation proposed by Chidambaram
could pave the way for monetary easing, which would revive growth.
The extent of easing, however, would depend upon the assessment of the RBI
on the commitment of the government to contain fiscal deficit in the
The RBI had been insisting on a sustained commitment to fiscal
consolidation to help it ease monetary policy.
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