Reducing the fiscal deficit would improve India's rating over 24 months, but GDP growth would be at a 6.8% rate
S&P: S&P Rating Agency's Director (Sovereign Ratings) Yifarn Phua said on Wednesday, that the fiscal deficit of the Center and the states should be less than seven percent of GDP. The Center should contribute more to this.
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S&P Global Ratings feels the central authority can better the fiscal deficit of the country to four percent of GDP, which may end up with an increment in the sovereign rating of India within the coming 24-month period.
"This should ideally be less than seven percent of GDP, and the Center must necessarily show leadership in this regard," said Rating Agency's Director (Sovereign Ratings) Yifarn Phua. The rating agency had maintained the rating at 'BBB-' but, in May this year, raised the rating from stable to positive with the outlook for India. The central government hopes the fiscal deficit will come down to 5.1 percent from 5.63 percent in the current financial year. The difference between government expenditure and revenue may decrease to 4.5 percent by 2025-26. According to S&P, it is estimated that the economic growth of India in the current financial year, i.e., 2024-25, will only be 6.8 percent, which is less than 8.2 percent of the previous financial year.
