On February 3, 2021 Moody’s in its report titled ‘Government Policy – India: Budget provides broad support; fiscal consolidation prospects still weak’ has increased India’s nominal Gross Domestic Product (GDP) growth at ~17% for FY 22 from earlier 14.3%. The projection has been made on the basis of a ‘pro-growth’ budget. This forecast is higher than 14.4% estimated in the Union Budget 2021-22.
- The report also highlighted the weak prospects of fiscal consolidation.
Highlights of the Report
i.Moody’s has forecasted India’s fiscal deficit for FY 21 at 7.5% of GDP and 5.5% for FY 22.
ii.While the budget has projected 9.5% for FY 21 and 6.8% for FY 22.
i.As per Moody’s the focus of the budget on the high capital expenditure, financial reforms and asser sales helps to promote growth and supply broad-based credit support.
ii.But, the implementation risks will remain and the slow budgetary consolidation will limit fiscal strength over the medium term.
Recent Related News:
On September 20, 2020 Krishnamurthy Subramanian, chief economic advisor in the finance ministry, Government of India informed that as per the estimate of finance ministry, India’s nominal Gross Domestic Product(GDP) is expected to grow by 19% in FY22(2021-22) on a low base.
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