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Moody's Ratings Senior Vice-President Guzman on Union Budget
This story was originally published at 15:58 IST on 1 February 2026
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MUMBAI - Christian de Guzman, senior vice-president, Moody's Ratings, said the following on the Union Budget for 2026-27 (Apr-Mar), presented in the Lok Sabha by Finance Minister Nirmala Sitharaman on Sunday:
The Union government's proposed Budget leaves India's sovereign credit profile largely unchanged. While the government continues to demonstrate its commitment to--and a lengthening track record of--fiscal consolidation, it has targeted a narrowing of the fiscal deficit by only 0.1 percentage points of GDP in fiscal year 2026-27, the smallest pace of reduction since India emerged from the pandemic. As such, the deficit remains wider than any of those incurred during the current government's first term in office.
In addition to the continued spending on infrastructure, the Budget provides tactical support for the economy against the backdrop of prevailing external uncertainties, including the unresolved issues around US tariffs, and despite the proven resilience of economic growth over the past year. At the same time, support for the economy, which includes measures announced in recent months such as GST (goods and services tax) rationalisation, will lead to an ongoing erosion of tax revenue as a share of GDP that will worsen debt affordability as measured by interest payments relative to revenue. Moreover, we do not expect significant progress on debt reduction, which supplants deficit consolidation as the anchor for fiscal policy, leaving our broader assessment of India's fiscal strength intact. End
Compiled by Janwee Prajapati
Filed by Rajeev Pai
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