Budget 2024: Rating agencies should take on board India’s efforts in bettering fiscal deficit: Finance Minister

Finance Minister Nirmala Sitharaman has sent a strong message to global sovereign rating agencies on India’s macroeconomic stability. She also explained the concept of GDP and the government’s ‘Disha Nirdashak Baatein (guiding points).’

Addressing the customary post-Budget conference along with her team, she said every rating agency should take on board the fact that India has not just cut fiscal deficit, but has bettered fiscal consolidation. ‘’A simple straightforward message for every rating agency is that we are not only aligning with the fiscal consolidation roadmap given earlier, but are bettering it,’‘ she added.

All three global rating agencies -- Fitch, S&P and Moody’s -- have the lowest investment grade rating on India, with a stable outlook. Investors view the ratings as a barometer of the country’s creditworthiness and it impacts borrowing of companies. Though India has consistently pitched for better ratings, agencies follow their own logic on fiscal math.

The Minister highlighted that fiscal consolidation is on track. ‘’The fiscal deficit target of 5.1 per cent of gross domestic product for 2024-25 clearly indicates that we are on on track to meet or be below 4.5 per cent by 2025-26,’‘ Sitharaman said.

On her new explanation of GDP, she said the three letters stand for ‘governance, development and performance’. ‘’I would like to outline what we have achieved in all three,’‘ she said. “On governance, this budget speaks from a position where we’ve delivered on development. We have managed the economy with the correct intentions, policies and decisions, so it’s governance with care.”

“D for development stands for people living better, earning better and having high aspirations for the future. ‘P’ stands for performance which is reflected in three consecutive years of 7 per cent growth, a fast-growing economy in the G20, and all parts of the country participating in growth,” she said.

“There will be a white paper on the economic performance of the last 10 years, compared with the previous 10 years...Govt has got the trust, confidence and blessings of the people based on its exemplary track record of GDP that is governance, development and performance...” the FM further added.

The Minister also highlighted five ‘Disha Nirdashak Baatein’ (path-showing points) that were outlined by Prime Minister Narendra Modi in his post-Budget address. The first is social justice as an effective governance model. The second is focus on the poor, youth, women, and the Annadatas (farmers). 

The third is focus on infrastructure, fourth on the use of technology to improve productivity, and the last is a high-power committee for challenges arising from demographic challenges.

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