Bulletin: India's Bigger Budget Is A Shot In The Arm For The Economy

SINGAPORE (S&P Global Ratings) Feb. 2, 2021--India's budget for fiscal 2022 (ending March 31, 2022) represents a comprehensive effort by the central government to shore up the country's nascent economic recovery. But the brawny spending program also entails higher-than-expected general government deficits--at more than 14% of GDP this fiscal year and 11.6% in fiscal 2022. While we currently see no material effect from the budget on India's key credit factors, the economy's brightening growth prospects will be critical to maintaining the sustainability of India's public finances, with general government debt likely to hover at more than 90% of GDP over the next few years. Though we have recently revised upward our forecast for India's real GDP growth to negative 7.7%

...February 2, 2021 SINGAPORE (S&P Global Ratings) Feb. 2, 2021--India's budget for fiscal 2022 (ending March 31, 2022) represents a comprehensive effort by the central government to shore up the country's nascent economic recovery. But the brawny spending program also entails higher-than-expected general government deficits--at more than 14% of GDP this fiscal year and 11.6% in fiscal 2022. While we currently see no material effect from the budget on India's key credit factors, the economy's brightening growth prospects will be critical to maintaining the sustainability of India's public finances, with general government debt likely to hover at more than 90% of GDP over the next few years. Though we have recently revised upward our forecast for India's real GDP growth to negative 7.7% for fiscal 2021, from negative 9.0% previously (see "Rising Demand, Falling Infections Temper India's COVID Hit," published on Dec. 15, 2020), it will take a long time for India's economy to heal from the pandemic....

Bulletin