Fitch Ratings projects lower fiscal deficit on higher revenue


The Centre could better its fiscal deficit at 6.6 per cent of Gross Domestic Product (GDP) in this financial year on stronger than-expected revenue buoyancy, even if the budgeted disinvestment target is not met, Fitch Rating Agency  has said.

Fitch had last week kept the sovereign rating unchanged at 'BBB-' with a negative outlook, and said that the risks to India's medium-term growth outlook are narrowing with rapid economic recovery from the pandemic and easing financial sector pressures.

Fitch Ratings Director (Asia-Pacific Sovereigns) Jeremy Zook stated that the implementation of a credible medium-term fiscal strategy to reduce debt burden and higher medium-term investment and growth rates without creating macroeconomic imbalances, such as from successful structural reform implementation and a healthier financial sector, are two key positive triggers that could lead to a revision of the outlook to stable. "We expect the federal government to run a deficit of 6.6% of GDP in the current fiscal year," the report stated.

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