Modi govt's fiscal consolidation pace post-Covid worse than peers? Moody's report flags weaker fiscal, debt metrics
Moody's rating agency has highlighted that India's fiscal consolidation pace post-Covid has underperformed compared to its peers, including emerging markets in the Asia-Pacific region.
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According to the report, India's fiscal metrics have remained weaker than those of Indonesia, the Philippines, and Thailand. The report indicates that these metrics, whether viewed at a central government or general government level, are still worse than the pre-pandemic era, during which India's rating was Baa2, a notch above the lowest grading (Baa3).
«We project the general government debt to stabilize at above 80 per cent of GDP over the next three years, as compared with 70.5 per cent recorded in fiscal 2018-19. We also forecast general government interest payments to fall to around 24 per cent of general government revenue over the next two years from over 28 per cent in fiscal 2020-21, but will still be higher than the corresponding ratio of less than 23 per cent in fiscal 2018-19,» it said.
Additionally, it said that the increase in budgetary allocations for infrastructure point to improving quality of spending, debt servicing remains a much higher proportion of expenditure, reflecting ongoing constraints to fiscal flexibility.
The full budget for FY25 is anticipated to be presented in July, following the formation of the
