Moody’s analyst says 2017 budget ‘fiscally prudent’, reforms key

The 2017 budget is “fiscally prudent,” as it maintains the government’s fiscal consolidation efforts and would lead to stable economic growth if implemented correctly, a Moody’s analyst said on Wednesday.

The 2017 budget is “fiscally prudent,” as it maintains the government’s fiscal consolidation efforts and would lead to stable economic growth if implemented correctly, a Moody’s analyst said on Wednesday.

A man watches finance minister Arun Jaitley deliver the budget speech at Parliament at the Bombay Stock Exchange (BSE) in Mumbai on February 1, 2017. (AFP Photo)

However, the ratings agency would still need to see more evidence of the effectiveness of reforms to justify a change in its ratings stance, said Marie Diron, associate managing director of the sovereign rating group at Moody’s Investors Service.

On Wednesday, finance minister Arun Jaitley presented a budget for the fiscal year beginning April 1 that increased spending on rural areas, infrastructure and fighting poverty, but keeping fiscal deficits in check.

“It is a fiscally prudent budget,” Diron said in a phone interview.

“What would potentially lead to an upgrade would be evidence that these reforms that are being implemented are becoming gradually more effective in ensuring a stable and growth environment, and hence lower debt than currently.”

Moody’s rates India at ‘Baa3’, or its lowest-investment grade, with a “positive” outlook.