Moody's Says India Fiscal Position Weak

Moody's and its Indian affiliate ICRA expect India's fiscal position to remain weak, noting a large debt burden and subdued growth in the medium term.

• "Wide fiscal deficits combined with lower real and nominal GDP growth over the medium term will constrain the government's ability to reduce its debt burden," said the ratings agency.
• Overall, ICRA projects that real and nominal GDP will rise 10.5% and 14.5%, respectively, for fiscal 2022 as the pandemic recedes. And according to Moody's, the central government's fiscal deficit for fiscal 2021 and fiscal 2022 should be lower than projected, supported by stronger revenue generation in the fourth quarter of fiscal 2021 and higher nominal GDP growth in fiscal 2022.
• According to ICRA, recent economic data signal a broadening of the economic rebound in the third quarter of fiscal 2021, with most tracked indicators recording improvements from the year-ago period. Data for the current quarter also suggest a stable economic momentum.
• Meanwhile, near-term prospects for the agricultural sector are bright, in ICRA's assessment, with many regions recording healthy precipitation and reservoir levels, increasing acreage of Rabi crops and healthy procurement trends.