Union Budget 2015 - 16: S&P lauds budgetary commitment to lower deficit

India's 2015-2016 budget highlights the government's commitment to keeping the fiscal deficit low despite lower-than-expected revenue growth, says ratings agency Standard & Poor's Ratings Services.

This commitment moderates the drag on sovereign credit support posed by the relatively heavy general government debt burden in India. Nevertheless, the debt burden and large budgetary subsidies could constrain the speed of improvements in India's credit metrics.

The Indian government, which S&P rates at "BBB-/Stable/A-3" expects the fiscal deficit for the fiscal year ending March 2015 to meet its target of 4.1 per cent of GDP.

Non-debt revenue for the year is likely to be lower by more than 7 per cent compared with the initial budget estimate, largely reflecting weak tax collection and lower-than-expected divestment/disinvestment income.

The government has reined in capital and other spending to meet its target budget deficit, S&P Ratings added.