Bulletin: India Remains On Fiscal Consolidation Course Despite Income Tax Cuts

SINGAPORE (S&P Global Ratings) Feb. 4, 2025--India's union budget remains in line with our expectation of gradual fiscal consolidation. This undergirds our positive outlook on the sovereign credit ratings. The central government lowered its fiscal deficit estimate for fiscal 2025 (year ending March 31, 2025) to 4.8% of GDP from 4.9%. It also budgeted a 4.4% deficit for fiscal 2026. These targets are broadly consistent with our projections. We believe India (BBB-/Positive/A-3) will hit its deficit targets despite revenue loss from lifting the threshold for minimum taxable income and slower economic growth. Support will stem from continued large dividends from the central bank and potential capital underspending. India differs from most regional and global peers in that its state governments

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