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Prez positive; Moody’s negative
Noting India recorded its highest foreign exchange reserves in 2015, President Pranab Mukherjee described the country as a haven of ‘stability’ in a turbulent global economy, even as Moody\'s Investors Service on Tuesday said the country\'s fiscal position will remain weaker than other emerging economies even if fiscal consolidation continued on course.
New Delhi: Noting India recorded its highest foreign exchange reserves in 2015, President Pranab Mukherjee described the country as a haven of ‘stability’ in a turbulent global economy, even as Moody's Investors Service on Tuesday said the country's fiscal position will remain weaker than other emerging economies even if fiscal consolidation continued on course.
- India's economy stable: Pranab
- Fiscal position to stay weak: Moody's
"GDP growth has increased making India the world's fastest growing economy among large economies, the President said underlining that it has put in place a non-adversarial tax regime to attract investments.
Ahead of budget for the next fiscal, Moody's said: "Even if the budgetary consolidation continues, India's fiscal metrics will remain weaker than rating peers in the near term, because of the relatively high level of India's State and Central government deficits and debt."
In his address to the joint sitting of Parliament at the opening of its Budget session, Mukherjee said: "Inflation, fiscal deficit and current account deficit have all decreased. India recorded the highest ever foreign exchange reserves in 2015. Innovative initiatives have helped India jump up 12 places in the latest rankings by the World Bank on ease of doing business."
On the government's initiatives towards an investor-friendly tax regime, Mukherjee said: "The government has taken a number of measures to put in place a simplified, progressive and non-adversarial tax regime by incorporating internationally prevalent best practices in tax administration." He said the government is engaged in reforming institutions, simplifying procedures and repealing obsolete laws, apart from unlocking infrastructure development opportunities and cutting subsidy leakages.
Besides, procedures have been simplified to improve ease of approvals, and dedicated commercial courts and commercial divisions in High Courts have been established. "For speedy resolution of commercial disputes, the long overdue amendments to the Arbitration Act have been made," he said. Employment is being generated through initiatives like Make in India, Startup India, Mudra scheme and Skill India, he added.
Moody’s said: "The importance of the upcoming budget lies in its message on the government's fiscal consolidation plans," the American agency said. "But at around 63.8 per cent of GDP, India's government debt ratio remains high compared to the median of 49.5 per cent for Baa3-rated peers. Without continued fiscal consolidation, India's government finances will continue to compare poorly to peers."
The fiscal deficit for 2014-15 touched 4.1 per cent of the gross domestic product, while the government has targeted at containing it at 3.9 per cent and 3.5 percent of GDP for this fiscal and the next, respectively. "The budget will reveal whether and how the government intends to maintain the trend of modest fiscal deficit reduction of the past few years," the report said.
