Fitch Ratings has assessed India’s FY27 budget as broadly neutral for growth, forecasting GDP expansion at 6.4%. The agency noted that fiscal consolidation remains modest, with a deficit target of 4.3% of GDP. While deficit reduction is proving difficult, the budget underscores India’s commitment to macroeconomic stability.
Global rating agency Fitch Ratings has released its latest commentary on India’s fiscal and growth trajectory following the FY27 budget announcement. The agency highlighted that India’s pace of fiscal consolidation is slowing, reflecting challenges in further deficit reduction. Despite this, Fitch emphasized that the government remains committed to maintaining macroeconomic stability.
Fitch currently forecasts India’s GDP growth at 6.4% in FY27, viewing the budget as broadly neutral for the growth outlook. The fiscal deficit target has been set at 4.3% of GDP, which Fitch described as “very modest” consolidation.
Key Highlights:
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Growth Forecast: India’s GDP expected to expand by 6.4% in FY27.
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Fiscal Deficit: Targeted at 4.3% of GDP, signaling modest consolidation.
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Budget Assessment: Broadly neutral for growth outlook.
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Challenges: Further progress on deficit reduction seen as increasingly difficult.
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Macro Stability: Budget demonstrates ongoing commitment to fiscal discipline and stability.
Fitch’s analysis suggests that while India’s fiscal path remains cautious, the emphasis on stability provides reassurance to investors and markets amid global uncertainties.
Sources: Fitch Ratings; Reuters; Economic Times