In his first budget speech, Jaitley said that the government would stick to a fiscal deficit target of 4.1 percent of gross domestic product (GDP) set by the previous regime for the year ending March 2015.

Budget lacks details on fiscal deficit target: Moody's

Moody's Investors Service welcomed the Finance Minister's pledge to keep government finances in check but said the lack of details on how to narrow the fiscal deficit made it challenging to assess the credit impact.
"From a ratings perspective, it is mildly positive to see there's a roadmap, but the lack of details gives us pause," Moody's sovereign rating analyst Atsi Sheth said.
"The intent appears to be there, but the measures have not been really thought through yet," Sheth added.
Moody's currently rates India at ‘Baa3’, the lowest investment-grade rating, with a ‘stable’ outlook.

Sheth added the fiscal deficit target could also be hard to achieve.
"If growth does not revive in the second half of the year, then I do think either they will have to be a very concerted effort at expenditure reduction or it will be missed by a couple of decimal points," Sheth said.

Unsure of whether India can meet FY15 fiscal deficit target: Fitch

Fitch Ratings called India's budget "constructive" for its sovereign rating but said that implementation will be key and noted it was unsure how the fiscal deficit target of 4.1 percent could be achieved without revenue increases or spending cuts.
"The overarching point of the Indian government's budget announcement is that the rhetoric and targets are credit constructive in many areas," Andrew Colquhoun, Head of Asia-Pacific Sovereigns Group at Fitch, said in an e-mailed comment.
Colquhoun also expressed surprise over the government sticking to a 4.1 percent fiscal deficit target, noting it estimated the measures announced on Thursday would actually reduce revenues by a net 0.1 percent to 0.2 percent of GDP.
"The agency (Fitch) is currently unsure how this (fiscal deficit) can be met without further revenue strengthening or expenditure-saving measures," Colquhoun wrote.
"Fitch has a more cautious projection on divestment proceeds than the budget. It remains to be seen how the government would react to a shortfall in tax or divestment revenues, if it occurred,” Colquhoun said.
Fitch holds "BBB-minus" rating with a "stable" outlook for India.


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