Budget 2024: Ratings agency Moody's reacting to the Union Budget presented by Finance Minister Nirmala Sitharaman has noted that the largest portion of the budget allocation is still servicing interest payments. As per Reuters, the agency has said that the country has not seen significant improvement in debt affordability to justify a rethink of the country's sovereign ratings upgrade.
"I think it is worth bearing in mind that the largest proportion of the Union budget is still servicing interest payments", Christian de Guzman, Senior Vice President at Moody's told Reuters. "I think this is why we continue to perhaps keep the rating where it is because there hasn't been a significant improvement in debt affordability," he added.
The ratings agency has reaffirmed the 'Baa3' rating on India with a stable outlook in August last year. A higher rating means the country's economy has lower risk which will in turn allow the country to borrow at cheaper rates.
The Reuters report quoted Guzman and said that the government's fiscal consolidation trend remains intact which is a positive and that "proactive" measures on revenue generation will be critical to achieve the 4.5% fiscal deficit target by 2025/26. He also added that fiscal deficit consolidation can prove to be the most challenging for the government.
Meanwhile, Finance Minister Nirmala Sitharaman in the press conference after Budget presentation mentioned that the government will not just align with the fiscal consolidation roadmap but will better it. She further added that all rating agencies must take this on board.
"Not only aligning with the fiscal consolidation roadmap that we gave earlier but bettering is that one straight forward message which every rating agency must take on board", Nirmala Sitharaman said.