New Delhi: Global ratings agency Moody’s Investors Service said on Wednesday that the narrower fiscal deficit forecast in the Union Budget for 2023-24 underscores the government’s commitment to longer-term fiscal sustainability and supports the economy amid high inflation and a challenging global environment.
Senior Vice President at Moody’s Investors Service, Christian de Guzman, said: “Although changes to the tax regime will forego some tax revenue, the budget predicts largely buoyant revenue on the back of strong nominal GDP growth and gains from tax administration. This will help to mitigate pressures on debt affordability from increasing debt servicing costs associated with rising interest rates.”
The Budget’s emphasis on capital expenditure suggests an ongoing improvement in the quality of spending, Guzman said.
Although the gradual fiscal consolidation trend remains intact and will help stabilise the government’s debt burden relative to nominal GDP, the high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths, including its high growth potential and deep domestic capital markets, said Guzman.IANS