[MUMBAI] India's federal budget for the year beginning in April unveiled by Finance Minister Arun Jaitley on Monday "is largely in line" with the country's current rating and will not shift its current thinking, said an analyst at Moody's Investors Service.
The comments come even after Jaitley stuck to a fiscal deficit target of 3.5 per cent of gross domestic product for the 2016/17 year, sparking gains in bond markets.
"What we've heard is largely in line with the current rating and the current outlook. There was nothing too surprising in the budget. This is fairly in line with what we had expected," said Atsi Sheth, Associate Managing Director, Sovereign Risk Group, Moody's Investors Service. "They have stuck to the fiscal deficit target. We always said fiscal consolidation would continue, but slowly, and that's indeed what the finance minister's budget is saying," Sheth said.
Sheth said Moody's would continue to monitor measures to increase revenue in a sustainable way as well as India's efforts to reduce debt levels.
Moody's currently rates India at "Baa3", its lowest investment grade rating. However, it raised the country's outlook to "positive" from "stable" in April last year, saying a ratings upgrade, if justified, could come within the next 12-18 months.