The Budget could have been more ambitious on the fiscal front, especially given a high public debt burden, and the less aspiring fiscal consolidation strategy is negative for ratings, an analyst at Fitch Ratings said on Monday.
Finance Minister Arun Jaitley on Saturday announced a Budget that put boosting growth before painful reforms, slowing the pace of fiscal deficit cuts and seeking to put domestic and foreign capital to work.
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"The medium-term fiscal consolidation strategy is less aspiring than in the past, which is negative from a sovereign rating perspective," Thomas Rookmaaker, director at Fitch's Asia-Pacific Sovereign Group wrote in an email.
"If disinvestment would be treated as a 'below the line' financing item, as is international best practice, instead of a revenue item, the fiscal deficit would actually rise from 4.3% in FY15 to 4.4% in FY16," he added.
