Moody's Investors Service, while silent on the sovereign rating on the higher-than-expected fiscal deficit numbers, has expressed doubts over attaining the higher revenue targets and divestment realisation as assumed in the Budget.
The Union Budget 2021-22 has pegged a fiscal deficit of 9.5 per cent for the current financial year as against the consensus 7 per cent, and 6.8 per cent for 2021-22 with a market borrowing of around Rs 12 lakh crore. It also assumes Rs 1.75 lakh crore to be scooped up from divestment. The Fiscal Responsibility and Budget Management Act will also be amended to achieve a fiscal deficit of 4.5 per cent of GDP by 2025-26 only.
The rating agency said the fiscal deficit target of 6.8 per cent for 2021-22 tries to strike a balance between supporting growth and a modest deficit reduction, but improvements in tax compliance and monetisation targets may be difficult to achieve. Besides, it said the government has limited room to reduce spending without further weakening growth, and nominal GDP growth will remain critical for future deficit reduction.
Start Research-backed Investing ...Now. Subscribe to Sapphire
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: