Interim Budget 2024's attempt to keep the "fisc" primed up should be enough to raise the nation’s credit rating, finance minister Nirmala Sitharaman told Business Today, even though major rating companies said they’re not ready to do so.
"Look at the borrowing, debt to gdp numbers of developed economies...they are well beyond 200s and 300s, when mine is below 100s. Their rating does not get affected by the debt to GDP ratio so when mine is below 100, at 80, and if this number matters to them (rating agencies), then I have no answers to give," Sitharaman told Rahul Kanwal, Editorial Director, Business Today and Siddharth Zarabi, Managing Editor, Business Today, in an exclusive post-Budget interview.
Sitharaman said the Centre's measures are more than adequate for an upgrade. The FM echoed Chief Economic Adviser V Anantha Nageswaran's point where he said there was enough in the Budget to signal the government’s commitment to the path of fiscal prudence and stability. "I hope the credit rating agencies will indeed take note of them,” he added.
The government’s budget avoided populist spending measures before the election and projected a sharper-than-expected cut to the budget deficit to 5.1% of gross domestic product.
However, credit rating companies are taking a wait-and-see approach for now. Fitch Ratings said a slightly faster pace of deficit reduction doesn’t significantly change the nation’s sovereign credit profile. Moody’s Investors Service said it will assess India’s rating after the full budget in July.
Both Fitch and Moody’s have India on the lowest investment grade rating, with a stable outlook.
Sitharaman said rating agencies should take note that the government has not only aligned with the fiscal consolidation roadmap but also bettered it.