MUMBAI: India’s outlined fiscal deficit target of 4.5% of GDP for 2025-26 will be challenging to achieve, an analyst at Fitch Ratings said on Wednesday, adding that the country’s sovereign rating continues to remain stable.
“Essentially, it (the fiscal glidepath) implies further consolidation of about 0.7% of GDP for each of the following two fiscal years,” Jeremy Zook, director - Asia Sovereign Ratings at the global rating agency, told Reuters.
“If we look at the recent deficit reduction trend, it seems like it would be a bit more difficult and absurd to achieve that level of deficit reduction.”
The government’s budget gap, which hit a high of 9.5% of GDP in 2020/21 as the spread of COVID-19 infections brought the economy to a halt, has narrowed since but remains well above the medium-term goal of 4.5% of GDP by 2025/26.
India could see some risks to FY26 fiscal deficit target: Moody’s analyst
The government is targeting a budget deficit of 5.9% of GDP for 2023/24, while the deficit was 6.4% in 2022/23, according to revised estimates.
Earlier today, an official at Moody’s Investors Service had also said that the government’s aim to achieve its fiscal deficit target for 2025/26 could see some risks.
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