INDIA: Fitch Says Fiscal Consolidation Could Contribute to Rating Upgrade

India’s post-election budget confirms that the new administration remains committed to reducing the fiscal deficit this and next year, despite the demands of coalition government, Fitch Ratings says. The sustained focus on supporting economic growth through high public capex also points to continuity in key areas.

• "Public finance metrics in general remain a weakness in India’s credit profile; its fiscal deficit, interest-to-revenue and debt ratios are still high compared with ‘BBB’ category peers," Fitch says.
• They add that "Sustained fiscal consolidation that supports a downward trajectory in the government debt ratio over the medium term would support India’s credit profile and could ultimately contribute to upgrade potential for the rating, particularly when combined with the current positive momentum on macroeconomic performance and external finances."