Fiscal Fortitude: India's Journey Despite Moody's Hesitation

Finance Minister Nirmala Sitharaman highlighted India's adherence to fiscal targets despite global challenges. Despite India's prudent fiscal management, Moody's did not upgrade its rating. Sitharaman's budget proposed significant tax relief and a plan to reduce fiscal deficit and debt-to-GDP ratio by 2031, maintaining fiscal discipline without compromising on public expenditure.

Finance Minister Nirmala Sitharaman proudly outlined India's commitment to fiscal discipline on Sunday, addressing the nation's solid track record of meeting debt reduction goals despite challenges. Her remarks seemed to dismiss Moody's ratings, which have remained unchanged despite improvements in India's fiscal management.

In her recent budget, Sitharaman made a delicate balance between ensuring fiscal prudence and stimulating growth. She presented the largest-ever tax relief for the middle class and set a clear path towards fiscal deficit reduction and debt management, with a target to manage the debt-to-GDP ratio by 2031, despite pandemic-induced borrowing.

Despite Moody's recent statement brushing off an immediate upgrade of India's ratings, citing insufficient improvements in debt and affordability, India sustains its fiscal discipline. Sitharaman emphasized that these efforts have not hindered investment in public welfare, infrastructure, or health. The finance minister defended increased capital expenditure and praised state-level fiscal contributions, highlighting a strategic focus on effective spending.

(With inputs from agencies.)