Fitch has a more cautious projection on divestment proceeds than the budget: Andrew Colquhoun
Nutan Gupta / 10 Jul 2014
Andrew Colquhoun, Head of Asia-Pacific Sovereigns Group, Fitch Ratings shares his views on the maiden budget presented by Finance Minister Arun Jaitely.
"The overarching point of the Indian government's budget announcement is that the rhetoric and targets are credit constructive in many areas, including returning to 7% to 8% economic growth and achieving budget deficit reduction. However, implementation will be key.
Fitch is surprised that the Indian Finance Minister Arun Jaitley has stuck with the outgoing government's fiscal consolidation path. The agency is currently unsure how this can be met without further revenue-strengthening or expenditure-saving measures. The revenue measures that were announced today actually have the net effect of reducing revenues by 0.1% to 0.2% of GDP.
Fitch has a more cautious projection on divestment proceeds than the budget. It remains to be seen how the government would react to a shortfall in tax or divestment revenues, if it occurred."