India’s 2013/14 budget unveiled last week offers a “realistic” plan to meet the country’s fiscal deficit target, and should be a credit positive for its sovereign ratings, Moody’s Investors Service said in a report on Monday.
India’s fiscal consolidation plans could pave the way for monetary easing, thus helping revive economic growth, Moody’s added.
“This plan of modest fiscal consolidation is credit positive for the sovereign because against a backdrop of subdued GDP growth and upcoming elections, it is a realistic effort to correct India’s macroeconomic imbalances,” Moody’s said in its report.
Moody’s is the only rating agency, of the three major credit agencies, to have maintained its “stable” outlook on India’s ratings. Standard & Poor’s and Fitch have the country with a “negative” outlook.