New Delhi: Center can do better Fiscal deficit On a higher-than-expected revenue bounce at 6.6 percent of GDP this fiscal, even though the budget disinvestment target has not been met, Fitch Ratings said.
The international rating agency last week kept the sovereign rating unchanged at ‘BBB-‘ with a negative outlook, and said India’s medium-term growth outlook risks a rapid economic recovery from the pandemic and eased financial sector pressure. decreasing together.
In an email interview with PTI, Jeremy Zook, Director (Asia-Pacific Sovereign) of Fitch Ratings said that two major positive triggers that could revise the outlook to stabilize are one to reduce the debt burden. Implementation of a credible medium-term fiscal strategy and high medium-term investment and growth rates without creating macroeconomic imbalances, such as successful structural reform implementation and a healthy financial sector.
“We anticipate that the central government will achieve a deficit of 6.6 per cent of GDP in the current fiscal, mainly due to a higher than expected jump in revenue. We estimate that the government falls short of its budget target. Disinvestment, ” said Zook.
In the Budget for 2021-22 (April-March), presented on February 1, the government had pegged the fiscal deficit, or the difference between the Centre’s spending and revenue, at 6.8 per cent of GDP, or Rs 15.06 lakh crore.
At the end of September, which is six months into the fiscal year, the fiscal deficit touched 35 per cent of the budget estimate.
Revenue Secretary Tarun Bajaj has said that on the back of good direct and indirect tax collection, the government’s tax collection will exceed the budget estimates for this financial year.
“Even after refunds, we have touched almost Rs 6 lakh crore in direct taxes till October… It is looking good. Hopefully, we should cross it.
“While we have given a lot of relief in indirect taxes in petrol, diesel and edible oil, there are some sunsets that have come in customs duty where the total profit will be around Rs 75,000-80,000 crore. But, still, I think we should get direct taxes. And both indirect taxes should be higher than the budget estimate.”
With regard to disinvestment, there is a collection of Rs 9,330 crore so far against the budget target of Rs 1.75 lakh crore.
When asked when Fitch expects India’s rating outlook to stabilize, Zook said, “We don’t have a specific timetable to address the negative outlook – resulting in a rating downgrade or outlook at the current rating level.” We are aiming to resolve such approaches within a normal time frame of two years, but it may take longer. We intend to review India’s sovereign rating twice annually.”
India’s general government debt increased to 89.6 percent of GDP in FY 2011. Fitch forecasts this ratio to drop slightly to 89 per cent, which is still well above the ‘BBB’ average of 60.3 per cent in 2021. According to the rating agency, the debt ratio should fall to 86.9 per cent by FY26 (ending March 2026).
“Two major positive triggers could lead to a revision of the outlook to stabilize. First, the implementation of a credible medium-term fiscal strategy to bring down the post-pandemic general government debt to the level of ‘BBB’ category counterparts. is for.
“Second, high medium-term investment and growth rates without the creation of macroeconomic imbalances, such as from successful structural reform implementation and a healthy financial sector,” Zook said.
Zook also said that an upcoming review will assess these triggers.
“Conversely, a downgrade may result from negative triggers, namely, failure to keep the general government debt-GDP ratio on a downward trajectory or a structurally weak real GDP growth outlook, for example, continued financial-sector weakness.” Or because of improved implementation. There is a shortage,” Zook said.
The international rating agency last week kept the sovereign rating unchanged at ‘BBB-‘ with a negative outlook, and said India’s medium-term growth outlook risks a rapid economic recovery from the pandemic and eased financial sector pressure. decreasing together.
In an email interview with PTI, Jeremy Zook, Director (Asia-Pacific Sovereign) of Fitch Ratings said that two major positive triggers that could revise the outlook to stabilize are one to reduce the debt burden. Implementation of a credible medium-term fiscal strategy and high medium-term investment and growth rates without creating macroeconomic imbalances, such as successful structural reform implementation and a healthy financial sector.
“We anticipate that the central government will achieve a deficit of 6.6 per cent of GDP in the current fiscal, mainly due to a higher than expected jump in revenue. We estimate that the government falls short of its budget target. Disinvestment, ” said Zook.
In the Budget for 2021-22 (April-March), presented on February 1, the government had pegged the fiscal deficit, or the difference between the Centre’s spending and revenue, at 6.8 per cent of GDP, or Rs 15.06 lakh crore.
At the end of September, which is six months into the fiscal year, the fiscal deficit touched 35 per cent of the budget estimate.
Revenue Secretary Tarun Bajaj has said that on the back of good direct and indirect tax collection, the government’s tax collection will exceed the budget estimates for this financial year.
“Even after refunds, we have touched almost Rs 6 lakh crore in direct taxes till October… It is looking good. Hopefully, we should cross it.
“While we have given a lot of relief in indirect taxes in petrol, diesel and edible oil, there are some sunsets that have come in customs duty where the total profit will be around Rs 75,000-80,000 crore. But, still, I think we should get direct taxes. And both indirect taxes should be higher than the budget estimate.”
With regard to disinvestment, there is a collection of Rs 9,330 crore so far against the budget target of Rs 1.75 lakh crore.
When asked when Fitch expects India’s rating outlook to stabilize, Zook said, “We don’t have a specific timetable to address the negative outlook – resulting in a rating downgrade or outlook at the current rating level.” We are aiming to resolve such approaches within a normal time frame of two years, but it may take longer. We intend to review India’s sovereign rating twice annually.”
India’s general government debt increased to 89.6 percent of GDP in FY 2011. Fitch forecasts this ratio to drop slightly to 89 per cent, which is still well above the ‘BBB’ average of 60.3 per cent in 2021. According to the rating agency, the debt ratio should fall to 86.9 per cent by FY26 (ending March 2026).
“Two major positive triggers could lead to a revision of the outlook to stabilize. First, the implementation of a credible medium-term fiscal strategy to bring down the post-pandemic general government debt to the level of ‘BBB’ category counterparts. is for.
“Second, high medium-term investment and growth rates without the creation of macroeconomic imbalances, such as from successful structural reform implementation and a healthy financial sector,” Zook said.
Zook also said that an upcoming review will assess these triggers.
“Conversely, a downgrade may result from negative triggers, namely, failure to keep the general government debt-GDP ratio on a downward trajectory or a structurally weak real GDP growth outlook, for example, continued financial-sector weakness.” Or because of improved implementation. There is a shortage,” Zook said.
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