A well balanced budget: Fitch

Chennai: The Indian Budget for 2023-24 presented by Finance Minister Nirmala Sitharaman in Parliament seeks to maintain a balance of sustaining a growth focus and deficit reduction, said Jeremy Zook, Director and Primary Sovereign analyst for India, Fitch Ratings.

According to Zook, the Budget was largely in line with Fitch Ratings expectations and did not significantly change the sovereign credit profile.

India's fiscal deficit and government debt ratio are high relative to peer medians, but the government's emphasis on reducing the deficit helps stabilise the debt ratio over the medium term, Zook remarked.

"This Budget sought to maintain a balance of sustaining a growth-oriented focus through a further increase in capex spending, while maintaining an eye toward deficit reduction. The government aims for modest fiscal consolidation, while accommodating a higher capex spend and changes to income tax slabs, largely by substantially reducing subsidies in the coming year," Zook said.

Adding further, Zook said given the uncertainty in the global economy and commodity prices, there is potential downside risk to the deficit target before the next general elections, in particular in the event that a shock such as another commodity price spike leads to pressures for sustained subsidy spending.

The Budget's nominal growth and revenue assumptions are broadly credible, in our view, though risks remain tilted to the downside given the uncertain global outlook.