November 12, 2024 20:52 (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
Manipur: 11 suspected Kuki militants killed in retaliation against attack on CRPF post in Jiribam | Man who issued death threat to Bollywood star Shah Rukh Khan arrested from Chhattisgarh | RG Kar: Arrested civic volunteer Sanjoy Roy claims ex-Kolkata CP Vineet Goyal framed him in the case | UK PM approves world's second 6th-gen stealth fighter aircraft developed to counter Russia, China | Russian Deputy PM Denis Manturov calls on PM Modi, discusses strategic partnership
PM Modi's smaller mandate can slow India's fiscal tightening: Moody's analyst
Photo courtesy: Image posted by BJP4India on X

PM Modi's smaller mandate can slow India's fiscal tightening: Moody's analyst

| @indiablooms | 05 Jun 2024, 08:14 pm

With Prime Minister Narendra Modi-led National Democratic Alliance getting a smaller mandate in the recently concluded Lok Sabha elections, reforms that could have potentially facilitated aggressive fiscal consolidation might face obstruction, an analyst at Moody's Ratings said on Wednesday.

Modi's Bharatiya Janata Party (BJP) won 240 seats on its own, which is 32 short of the halfway mark in the 543-member decision-making lower house. The BJP will have to bank on the National Democratic Alliance (NDA) to form a government with a total of 293 seats.

"It looks like the prospects for even more aggressive consolidation are not as bright as they were prior to the election results," Christian de Guzman, senior vice president, sovereign risk group, told Reuters in an interview.

"I still think that the prospects for consolidation will remain intact, and they will retain a level of fiscal discipline."

India's benchmark 10-year bond yield saw its biggest surge in eight months following the poll outcome.

India is eyeing to narrow its fiscal deficit to 4.50 percent of gross domestic product by the end of 2025/26, from the 5.1 percent projected in the current year ending in March 2025.

The smaller mandate for Modi raises risks of more populist spending to consolidate political support, Guzman said.

The July budget would account for the Centre's plans with the Reserve Bank of India's record 2.11 trillion rupees ($25.28 billion) worth of surplus transfer.

It could use it to further consolidate the fiscal position or to garner political support, Guzman said. "A shaky political outcome perhaps suggests higher odds for the latter."

S&P Global Ratings raised India's sovereign rating outlook to 'positive' from 'stable' last week saying the country's robust economic expansion was having a constructive impact on its credit metrics.

On Wednesday, Fitch said the weakened majority for Modi's alliance could pose challenges for the more ambitious elements of the government's reform agenda.

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.