Raising hopes of a sovereign credit upgrade for India, global rating agency Moody’s on Monday applauded Finance Minister P Chidambaram’s Budget saying that it pursues a realistic fiscal consolidation path and is ‘credit positive’.
‘India’s budget pursues realistic fiscal consolidation, a credit positive for the sovereign,’ said Moody’s in its credit outlook for the country.
Chidambaram, in his Budget for financial year 2013-14, has proposed to bring down the fiscal deficit to 4.8 per cent of gross domestic product (GDP) from 5.2 per cent in the revised estimates (RE) for the current financial year (2012-13).
‘This plan of modest fiscal consolidation is credit positive for the sovereign because, against a backdrop of subdued gross domestic product growth and upcoming elections, it is a realistic effort to correct India’s macroeconomic imbalances,’ the international rating agency said.
Earlier, ratings agencies like Standard and Poor’s (S&P) and Fitch had threated to downgrade India’s sovereign credit rating to junk grade in view of the worsening fiscal position of the government.
They too are likely to come out with fresh assessments in the backdrop of the Budget proposals.
Moody’s had assigned BAA3 rating to India, which indicates investment grade rating with stable outlook.
The report further said that the fiscal consolidation model proposed by Chidambaram might pave the way for monetary easing, which would revive economic growth.
The extent of easing, however, would depend upon the assessment of the Reserve Bank of India (RBI), the country’s central bank, on the commitment of the government to contain the fiscal deficit in the Budget.
The Reserve Bank of India had been insisting on a sustained commitment to fiscal consolidation to help it ease monetary policy.
NO SUV DUTY HIKE ROLLBACK, MORE DECISIONS IN BUDGET SESSION: FM
Virtually ruling out a rollback of the 3 per cent hike in excise duty on SUVs, Finance Minister P Chidambaram on Monday assured India Inc that a clutch of decisions, mainly on indirect taxes, would be announced during the course of the debate on the Budget and Finance Bill in Parliament.
In his post-budget meeting with the captains of industry, he said that the auto sector needs some help, observing that high interest rates are impacting auto sales. He also expressed confidence that the Reserve Bank of India (RBI) would reduce interest rates though RBI Governor Duvvuri Subbarao would have to take a call in this regard.
‘We will re-look at all suggestions on indirect taxes and announcements will be made in Parliament. I have all of March to look into all suggestions. We will take decisions and announce them when I reply to the debate in Parliament by the end of March,’ said the finance minister.
The Budget, he said, contains certain announcements that require legislative changes and some on which only mere executive actions are needed.
Merely because something was not announced or touched upon does not mean that those areas would be ignored, he assured.
‘Budget making is a continuous process. When I reply to the debate on the Budget, there will be some more announcements and then when we reply to the Finance Bill, there will be more announcements. A number of decisions which are in the making, or are in the process of being taken, will be announced in Parliament,’ he said.
Referring to the increase in excise duty on SUVs from 27 per cent to 30 per cent, he said that a dual pricing on diesel at retail pumps is not possible. The 3 percentage point increase can be a way of realising the subsidy on diesel, which 98 per cent of SUVs use.
The basic message of the budget is to give the signal to the country and the world that India is on the path of fiscal consolidation and to investors worldwide that they can invest in this country, said the Harvard Business School-educated finance minister.
‘India’s budget pursues realistic fiscal consolidation, a credit positive for the sovereign,’ said Moody’s in its credit outlook for the country.
Chidambaram, in his Budget for financial year 2013-14, has proposed to bring down the fiscal deficit to 4.8 per cent of gross domestic product (GDP) from 5.2 per cent in the revised estimates (RE) for the current financial year (2012-13).
‘This plan of modest fiscal consolidation is credit positive for the sovereign because, against a backdrop of subdued gross domestic product growth and upcoming elections, it is a realistic effort to correct India’s macroeconomic imbalances,’ the international rating agency said.
Earlier, ratings agencies like Standard and Poor’s (S&P) and Fitch had threated to downgrade India’s sovereign credit rating to junk grade in view of the worsening fiscal position of the government.
They too are likely to come out with fresh assessments in the backdrop of the Budget proposals.
Moody’s had assigned BAA3 rating to India, which indicates investment grade rating with stable outlook.
The report further said that the fiscal consolidation model proposed by Chidambaram might pave the way for monetary easing, which would revive economic growth.
The extent of easing, however, would depend upon the assessment of the Reserve Bank of India (RBI), the country’s central bank, on the commitment of the government to contain the fiscal deficit in the Budget.
The Reserve Bank of India had been insisting on a sustained commitment to fiscal consolidation to help it ease monetary policy.
NO SUV DUTY HIKE ROLLBACK, MORE DECISIONS IN BUDGET SESSION: FM
Virtually ruling out a rollback of the 3 per cent hike in excise duty on SUVs, Finance Minister P Chidambaram on Monday assured India Inc that a clutch of decisions, mainly on indirect taxes, would be announced during the course of the debate on the Budget and Finance Bill in Parliament.
In his post-budget meeting with the captains of industry, he said that the auto sector needs some help, observing that high interest rates are impacting auto sales. He also expressed confidence that the Reserve Bank of India (RBI) would reduce interest rates though RBI Governor Duvvuri Subbarao would have to take a call in this regard.
‘We will re-look at all suggestions on indirect taxes and announcements will be made in Parliament. I have all of March to look into all suggestions. We will take decisions and announce them when I reply to the debate in Parliament by the end of March,’ said the finance minister.
The Budget, he said, contains certain announcements that require legislative changes and some on which only mere executive actions are needed.
Merely because something was not announced or touched upon does not mean that those areas would be ignored, he assured.
‘Budget making is a continuous process. When I reply to the debate on the Budget, there will be some more announcements and then when we reply to the Finance Bill, there will be more announcements. A number of decisions which are in the making, or are in the process of being taken, will be announced in Parliament,’ he said.
Referring to the increase in excise duty on SUVs from 27 per cent to 30 per cent, he said that a dual pricing on diesel at retail pumps is not possible. The 3 percentage point increase can be a way of realising the subsidy on diesel, which 98 per cent of SUVs use.
The basic message of the budget is to give the signal to the country and the world that India is on the path of fiscal consolidation and to investors worldwide that they can invest in this country, said the Harvard Business School-educated finance minister.