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India’s credit rating will depend on the policies of the new government, Moody’s said on Thursday and expressed the hope that the country would continue with its fiscal consolidation plan.
“Any credit implications of the outcome of India’s general election will be determined by the policies adopted by the government in the next few years. These policies are yet to be formulated,” Moody’s Investors Service V-P Sovereign Risk Group, William Foster, said.
Moody’s expects the broad push towards fiscal consolidation to remain, although with greater policy emphasis on supporting low incomes, Foster added.
According to the trend, the BJP-led NDA will form the government at the Centre for the second successive term with absolute majority.
In 2017, the US-based rating agency upped India’s rating to ‘Baa2’ from ‘Baa3’, changing outlook to ‘stable’ from ‘positive’, and said reforms would help stabilise rising levels of debt.
Deviating from the fiscal consolidation path as per the Fiscal Responsibility and Budget Management (FRBM) Act, the government in February’s interim budget pegged the fiscal deficit for 2019-20 at 3.4 per cent of GDP, as against the original target of 3.1 per cent.
In 2018-19, the fiscal deficit was 3.4 per cent of GDP.
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