Moody’s issued a warning on Sunday that the Indian economy is likely to expand by 6-6.3% in the June quarter, with risks of fiscal slippage because of lower-than-expected government revenues this fiscal year.
In contrast to the Reserve Bank’s projection of 8% expansion in the primary quarter, Moody’s growth forecast for India is lower.
Gene Fang, Associate Managing Director of Moody’s Investors Service, said in an interview with PTI that India’s general government debt is expected to be around 81.8% of GDP by 2022-23 and the country will have low debt affordability.
India possesses high development potential, and credit assets include a robust domestic support base for government obligations as well as a stable external position, Fang added.
“We anticipate India’s growth to remain range-bound at 6-6.3% in the first quarter of the fiscal year, which is relatively steady compared to the recorded 6.1% growth in the final quarter of fiscal year 2022-23,” Fang clarified.
“With household demand anticipated to improve due to the control of both core and headline inflation readings, the slackened impact of higher interest rates remains a significant risk to fixed capital formation,” Fang added.
Gross Fixed Capital Formation or GFCF is an indicator of economic investment.
Fang stated that India’s assets are rooted in its vast and varied economy with high development potential, evident in this year’s relatively sturdy growth forecast in the face of a weak global economic outlook, as a Baa3-rated sovereign.
He added that the government’s achievement of its fiscal objectives over the previous two years has addressed concerns regarding fiscal policy.
The fiscal deficit, or the difference between government spending and revenue, fell from 6.7% of GDP in 2021-22 to 6.4% in 2022-23.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
