labels: industry - general, economy - general, governance, union budget 2006
India's budget expected to put deficit reduction back on track: S&Pnews
28 February 2006

Singapore: Standard & Poor's Ratings Services said today the Indian government's (BB+ / Stable / B) fiscal responsibility commitment shown in its Budget 2006/2007 should put the country's deficit reduction effort back on track.

The budget envisages a lower fiscal deficit of 3.8 per cent of GDP, compared with an estimated 4.1 per cent in 2005/2006. Standard & Poor's believes this should help contain the combined central and state government deficits, currently estimated to be just 8 per cent-9 per cent of GDP.

The budget forecasts a sustained strong growth of 19 per cent in taxation revenues for the year to March 2007, from 21 per cent in 2005/2006; it focuses on boosting spending on health, education, and rural infrastructure, and sees the implementation of further tax reforms.

The government will have to adhere steadfastly to these measures, together with expenditure control, in order to further consolidate its fiscal position and reduce its high public debt burden (90 per cent of GDP in 2005) and fiscal inflexibility, which are credit constraints for India.

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India's budget expected to put deficit reduction back on track: S&P