Fitch Affirms India's Fiscal Commitment in FY25 Budget

Fitch Ratings highlighted the Indian government's commitment to fiscal deficit reduction in the FY25 Budget, presented by Finance Minister Nirmala Sitharaman. The deficit target has been revised lower, signaling a focus on fiscal consolidation and economic growth. Sustained improvements in fiscal metrics support India's credit profile.

Fitch Ratings on Tuesday emphasized the Indian government's dedication to reducing fiscal deficit as evidenced in the FY25 Budget. Finance Minister Nirmala Sitharaman presented the first Budget of the Modi 3.0 government, lowering the deficit target to 4.9% of GDP, down from 5.1% projected in the interim Budget.

Jeremy Zook, Director and Primary Sovereign Analyst for India at Fitch Ratings, praised the government's effort, noting that ongoing fiscal consolidation coupled with positive macroeconomic momentum bolsters India's credit profile.

Despite the lowered deficit target, Fitch noted the absence of further details on medium-term fiscal objectives. Public finance metrics still remain a relative weak spot for India, with high fiscal deficits, interest-to-revenue, and debt ratios compared to peers.