Indian Budget marks continuation of fiscal prudence: Moody's

Moody's is of the opinion that the measures that effectively foster higher Foreign Direct Investment (FDI) would be credit positive by bolstering balanced growth and providing stable financing for the current account deficit, adding that India's external vulnerability is currently low, a support to the rating.

William Foster, the Vice President of Sovereign Risk Group in Moody's Investors Service says, "The budget speech's emphasis on fiscal prudence indicates that continued commitment to gradual fiscal consolidation remains. This is consistent with the target of a deficit at 3.2 per cent of GDP this fiscal year, followed by 3 per cent. These targets are not materially different from the previous roadmap and our projections."

He further added, "Higher revenues seem likely to largely stem from higher incomes and profits, as well as improved revenue collection. We will continue to monitor revenue collection as an indication of policy effectiveness, in particular to which extent measures such as demonetisation and GST enhance overall revenue intake."