The key pointsCapital expenditure increasesDeficit forecast for the 2024-25 fiscal year fallsThe cost of debt remains high, according to Moody’s
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The government led by Prime Minister Narendra Modi showed great optimism on Thursday in presenting an interim budget with a much less “electoral” flavor than one might expect.
A few months before the vote that could give him a historic third consecutive mandate, Modi has not pushed on public spending aimed at those vast sections of the population that depend on state subsidies, but has focused on infrastructure investments to modernize the country. A choice also made possible by the decision taken a few months ago during another electoral campaign to extend for 5 years a program aimed at 800 million Indians, more than half the population, which gives the right to have 5 kilos of rice a month.
It fails in the heat
Thanks to the increase in tax revenues, Finance Minister Nirmala Sitharam has set the deficit target at 5.1% of GDP for the 2024-2025 fiscal year, down from the 5.8% forecast for the previous fiscal year. course which will end on March 31st.
«In this historic budget – said Modi – capital expenditure has been increased to 11,110 billion rupees», a figure which is equivalent to almost 123.9 billion euros. A new budget law is expected in the months following the vote.
Rating expected to improve
The Indian government is trying to curb the budget deficit after it rose to 9.2% of GDP during the pandemic. The target is to bring it back to 4.5% by the 2025-26 fiscal year. Deficit and debt containment will help improve India’s credit rating outlook and the attractiveness of sovereign bonds to foreign investors ahead of India’s inclusion in global bond indices.