Do not expect rating downgrade for India: FM

Finance Minister Nirmala Sitharaman does not foresee a rating downgrade for India even though it has proposed higher expenditure and fiscal deficit for FY 2021-22 (FY22). Meanwhile the Parliament has completed the budget exercise for FY22 with Rajya Sabha returning the Finance Bill. Now, once the President assents, the Bill will become an Act. The Demands for Grants and the Appropriation Bill have already gone through the parliamentary process and are expected to be signed by the President soon. With all these, the Union Budget for FY22 is set to be implemented from April 1.

‘Higher spending’

Replying to the debate on the Finance Bill in the Rajya Sabha, the Finance Minister said India enjoys an investment grade rating. Sitharaman also stated that she does not see a rating downgrade because of higher spending. The budget has proposed an expenditure of over ₹34-lakh crore with the fiscal deficit estimated at 6.5 per cent. The Finance Minister cited low inflation, higher GDP growth, record foreign investment and lower fiscal deficit to defend the government’s handling of the economy.

Attacks Opposition

Sitharaman attacked the Congress-led UPA government for leaving a “mess” and mismanaging the economy. “The measures taken in response to the 2008 global financial crisis by the UPA led to high inflation and ‘taper tantrums’,” she said. The FM said out that average GDP growth between 2014 to 2019 was 7.5 per cent as against 6.7 per cent during 2009 to 2014 under the UPA. Similarly, consumer price inflation was 10.3 per cent under five years of the UPA rule, while it was 4.8 per cent during 2014-19.

Fiscal deficit too has been contained at 3.65 per cent of the GDP during 2014-19 as compared to 5.3 per cent in the previous five years, she said, adding current account deficit has also improved from (-)3.34 per cent to (-)1.43 per cent. Foreign exchange reserves have grown from $303 billion in 2014 to $411.9 billion, she said, adding NPAs or bad debt declined to ₹8.99-lakh crore as of March 2020.

Earlier, participating in the debate, BJP member Sushil Kumar Modi said that bringing petrol and diesel under the GST regime is not possible for the next 8-10 years as no state is ready to face the annual revenue loss of over ₹2-lakh crore on this account, the former finance minister of Bihar dared the opposition to raise the matter in the GST Council, saying no chief minister or finance minister from non-NDA ruled states has opposed any decision of the GST Council.

“Repeatedly, the issue of putting petrol and diesel in the GST regime is being raked up. I have been associated with the GST for a long time, I want to know from the House, that if petrol and diesel are put under the GST regime, who will compensate for the loss of revenue of over ₹2-lakh crore to states,” he asked.

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