Rating agency Moody’s recently predicted that India’s nominal gross domestic product (GDP) will grow by nearly 17% in fiscal 2021.
♦ The US-based rating agency further predicted that India’s fiscal deficit forecast will be higher than expected.
♦ It believes that slower integration will limit India’s financial strength in the medium term.
♦ The growth rate predicted by Moody’s is higher than the growth rate proposed in the 2021 league budget. The GDP forecast in the budget is 14.4%. In addition, the overall deficit forecast is larger than expected.
♦ The report also said that the focus of the 2021 budget is to increase capital expenditures, financial sector reforms and asset sales. This will help stimulate growth. India is expected to have a fiscal deficit of 9.5% of GDP by the end of March.
♦ Therefore, the rating agency emphasizes that greater transparency in off-balance sheet food subsidies and conservative revenue assumptions will increase the government’s fiscal deficit in 2020.
♦ Moody’s Corporation is an American business and financial services company founded by John Moody in 1909. It is the holding company of Moody’s Investor Services (MIS) and Moody’s Analytics (MA).