India's fiscal targets higher; consolidation slower than expected: Fitch

The wider deficits and more gradual pace of consolidation will lift India's government debt

Global rating agency Fitch Rating said the deficit targets presented in India’s Budget are higher and medium-term consolidation is more gradual than expected.

Fitch had placed India’s ‘BBB-’ rating on negative outlook in June 2020, in recognition of the Coronavirus (Covid-19) pandemic’s impact on growth prospects and the challenges of the high public debt burden.

The government’s prioritisation of fiscal support for the population’s health and well-being, and ongoing economic recovery are understandable.  At the same time, however, there is little fiscal space. India’s public debt ratio was high prior to the virus shock (around 90 per cent of Gross Domestic Product