The Indian Government is most probably going to Cap its overall spending at around rupees 4.5 lakh crore due to concerns that excess spending could Trigger a sovereign rating downgrade.
One of the most popular rating agencies, Fitch also showed concerns towards India’s deteriorating financial health. It also said that the country’s sovereign rating could be put at risk if more pressure is put on the economy as the country tries to steer through the coronavirus crisis. The country has already lost 0.8% of the gross domestic product and is expecting to pave way for another 1.5-2% of the GDP. In March also the government presented a 1.7 trillion outlay to help the poor by cash transfers into their bank accounts and food grain distribution.
A senior government official in an interview with Reuters said “we have to be cautious as downgrades have started happening for some countries and rating agencies treat developed nations and emerging markets very differently.”
The future plans are expected to support the people who have lost their jobs due to the lockdown and both micro and macro scale industries. Indian Government This shall be achieved via tax holidays and other measures. However, there’s still no official notice by the finance ministry.
A 40 day nationwide lockdown brought all the operations of the $2.9 trillion economy to a halt. It is expected to be further extended in the big cities like Delhi and Mumbai. Fitch and standard and Poor’s both have settled India at an investment grade rating which one milestone above a junk rating while Moody has rated India two notches above junk. India plans to hold a fiscal deficit target of 3.5% of the gross domestic product for the year ending in March 2021.