The combined fiscal deficit of Union and state governments
in India will come down to 6.5 per cent - still way off
the 3.8 per cent projected by the government - during
2006-07 from 7.5 per cent last fiscal, rating agency Fitch
Rating, which recently raised India's rating to investment
grade, said economic expansion will boost tax revenue
and help reduce the government's budget deficit.
the Union government has projected a fall in fiscal deficit
to 3.8 per cent of GDP this fiscal, the Centre's fiscal
deficit already stood at Rs77,740 crore (Rs777.40 billion)
during April-June 2006-07, that is, more than 52 per cent
of the projected figure of Rs148, 686 crore (Rs1486.86
billion) for the whole of 2006-07.
Fitch had also raised the country's foreign and local
currency issuer default ratings (IDRs). While it raised
India's long-term IDR to BBB- (BBB minus) from BB+ (BB
plus) both with stable outlook, it raised the short-term
foreign currency IDR to F3 from B. Fitch upgraded the
country ceiling to BBB- (BBB minus) from BB+. This is
one-notch above the rating by S&P (BB+/positive) but
in line with Moody's (Baa3/stable). Fitch had upgraded
India to BB+ (BB plus) in January 2004.
attributes the upgrades to the country's impressive economic
external balance and improvement in public finance. Economic
growth supported by huge investments in infrastructure
will make all the difference, Fitch said.