2 weeks Ago By TOI News Desk
NEW DELHI: Finance minister Nirmala Sitharaman on Sunday cited India’s “unblemished track record” of fiscal consolidation , even as credit rating agency Moody’s decided not to upgrade the country’s sovereign rating. Sitharaman said that India has never deviated from its fiscal consolidation and debt reduction targets. She also defended the government’s strategy of balancing fiscal prudence with growth, highlighting tax reliefs and a clear debt management plan outlined in the Union Budget for 2024-25.
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The agency ruled out an immediate upgrade, citing concerns over the country’s debt burden and fiscal deficit levels. "While we view the government's sustained fiscal discipline and narrower fiscal deficits as credit positive, we don't expect these improvements in the debt burden or 'debt affordability' to be enough to trigger a sovereign rating upgrade at this time," Christian de Guzman, Senior Vice President at Moody’s Ratings, told PTI. Moody’s evaluates a country’s creditworthiness, assessing its ability to repay debt.
A higher rating generally translates to lower borrowing costs and increased investor confidence, while a lower rating signals higher risks. Government’s debt management plan Sitharaman stressed that India had to borrow more during the COVID-19 pandemic due to global supply chain disruptions and geopolitical conflicts but has remained committed to reducing debt levels. "The government has volunteered to say that it will manage the debt," she said, adding that India has been steadily working towards reducing the debt-to-GDP ratio in line with expert recommendations.
She also highlighted that while focusing on fiscal discipline, there has been no reduction in public spending on essential sectors such as social welfare, education, and healthcare. Capital expenditure and growth focus She defended the government’s approach to capital expenditure, which has been pegged at Rs11.21 lakh crore for 2024-25, a modest increase from Rs 10.
18 lakh crore in the revised estimate for the current fiscal year. "If we are looking at the numbers, because we've got used to 16 per cent, 17 per cent increase (in capital spending) every year from 2020, and saying you have not increased it by that number (in the Budget for 2025-26), I would equally want to ask you to please look at the way in which the quality of spending has happened, particularly capital expenditure," she stated. Sitharaman also praised states for effectively utilising the 50-year interest-free loans provided for capital expenditure, contributing to overall infrastructure growth.
The spending for the ongoing fiscal was lower than initially budgeted due to a slowdown in expenditure during the general election period. However, Sitharaman remains confident in the government’s strategy of balancing fiscal responsibility with economic expansion..
