'Budget credit neutral for sovereign, positive for corporates, infrastructure'

K. R. Srivats New Delhi | Updated on January 24, 2018

The Budget is largely credit neutral for the ‘sovereign’ despite a push back in the deficit reduction plan, Moody’s Investors Service, a global credit rating agency has said.

For corporates and infrastructure, the Budget is positive and for banks, it has come as a “mixed bag”, Moody’s said in a note following the Budget announcement on Saturday.


For the sovereign, the Budget is largely credit neutral. Despite the push-back in India’s fiscal deficit reduction plan, the overall policy emphasis on economic growth, if successful, would eventually support narrower fiscal deficits, according to Moody’s.


For corporates, the Budget is generally credit positive. Measures designed to reduce and rationalise taxes, boost economic growth and increase the ease of doing business will support the credit profiles of Indian non-financial companies.

However, a reduction in the fuel subsidy allocation is credit negative for upstream oil and gas companies.


For infrastructure companies, the Budget is credit positive. A significant increase in planned public sector capital expenditure, coupled with measures to increase investment and financing in the private sector, will be credit positive for infrastructure companies.


For banks, the Budget is a mixed bag. Public sector banks can expect limited near-term relief, with the Government earmarking a significantly lower amount of capital allocation than in recent years.

However, proposals to set up a bank board bureau and adopt a new bankruptcy law have the potential to improve governance over time if implemented effectively.

Published on March 02, 2015

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