New Delhi: The center can be better fiscal deficit at 6.6 percent of GDP in this financial year on the buoyancy of revenue that is stronger than estimates, even if the budgeted target is budgeted not fulfilled, said Fitch Ratings.
The international rating agency has last week keeping Sovereign rankings unchanged in ‘BBB-‘ with negative views, and said that the risk of Indian medium-term growth prospects narrowed to rapid economic recovery from rapid financial sector pressure.
In an email interview with PTI, the Director of Fitch Ranking (Asia-Pacific Ruler) Jeremy Zook said two positive key triggers that could cause a revision of the prospect to stable is the implementation of the credible medium-term fiscal strategy to reduce the debt load and the level of medium-term investment and growth higher without creation of macroeconomic imbalances, such as the implementation of successful structural reforms and healthier financial sectors.
“We estimate that the central government will achieve a deficit of 6.6 percent of GDP in the current fiscal year, mostly as a result of buoyancy of revenues that are stronger than estimates.
Our forecasts assume that the government does not include its budget target.
Divestment,” said Zook .
In a budget of 2021-22 (April-March) presented on February 1, the government has set a fiscal deficit, or the gap between expenditure and central income, at 6.8 percent of GDP or RS 15.06 lakh crore.
At the end of September, namely six months in the financial year, the fiscal deficit touched 35 percent of budget estimates.
Tarun Bajaj’s income secretary said Kitty’s government tax collection would exceed the budget for estimating this financial year behind direct and indirect tax mop-ups.
“After a refund too, we have touched almost Rs 6 lakh crore until October in direct tax …
it looks good.
May we have to exceed that.” Even though we have provided a lot of assistance in indirect taxes in petrol, diesel and oil that can be eaten, there are also some sunset coming in customs where the total benefits are around Rs 75,000-80,000 Crore.
But, still, I think we have to go beyond the budgeted estimates on direct and indirect taxes, “said Bajaj to PTI.
Regarding the disinvestment, such as opposing the target budgeted by Rs 1.75 lakh Crore, the mop-up has so far stood in the hospital 9,330.
Crore.
Asked when Fitch expects a reversal from the prospect of India’s ranking to stable, Zook said, “We do not have a specific schedule to complete negative prospects – which can lead to ranking rating or stabilization of prospects at the current rank rate.
We usually aim to complete such views in the Horizon of two years, but can take longer.
We are trying to review Indian sovereignty twice every year.
“Indian public government debt rose to 89.6 percent of GDP at FY21.
Fitch estimates that the ratio decreases slightly up to 89 percent, still far above the median ‘BBB’ 60.3 percent in 2021.
The debt ratio must decrease to 86.9 percent by FY26 (ending March 2026) in accordance with the rating agency.
“Two positive key triggers can lead to the revision of the prospect to stable.
First, the implementation of a credible medium-term fiscal strategy to bring post-pandemic government debt down towards the ranking level of ‘BBB’.
“Second, medium-term investment and higher growth rates without the creation of macroeconomic imbalances, such as the implementation of successful structural reforms and healthier financial sectors,” Zook added.
Zook also said the upcoming reviews would rate this trigger.
“On the contrary, negative triggers can result in downgrading, that is, failure to place the PDP ratio of public government debt on the bottom trajectory or the prospect of a structural significant GDP growth, for example, because of the weakness of the sustainable financial sector or the implementation of reforms is less,” added Zook.
The FY22 Center fiscal deficit may be better at 6.6%: Fitch
