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Budget strikes balance between fiscal consolidation, growth: S&P
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"The flexibility accorded by such revenue growth will be vital given ongoing spending pressures related to public investment, infrastructure, and the rural and social sectors."
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Mumbai
March 1
Standard & Poor's Ratings Services has said that the Union Budget 2007-08 reflects ongoing efforts toward fiscal consolidation.
However, risk of political pressure and the challenge to balance the need for further fiscal consolidation with pro-growth objective could impact the steady progress in recent years on the fiscal front.
Fiscal targets
The international rating agency said continuing adherence to the fiscal targets set out in the Fiscal Responsibility and Budget Management Act 2003 (FRBM) remains a cornerstone in maintaining the sovereign's creditworthiness, said the press release by S&P Ratings Services.
S&P Ratings Services said the Budget seems to have struck a balance between fiscal consolidation and the need to spend, especially in key areas such as agriculture, rural economy and social services.
"The flexibility accorded by such revenue growth will be vital given ongoing spending pressures related to public investment, infra- structure, and the rural and social sectors.
"The latest Budget, in which the Government has increased its allocations for education and health by 34 per cent and 22 per cent, respectively, underlines such spending commitments," said the press release.
Farm sector
"The agriculture sector is a key focus of the latest budget, reflecting the sector's central role in India's overall growth story and its social-political importance.
"The Budget addresses the need to alleviate price pressures emanating from this sector due to supply constraints," said the statement.
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