Fitch said India’s budget underscores macro stability and fiscal credibility, with growth seen steady.
Summary:
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Fitch Ratings said India’s latest budget reinforces its commitment to macro stability, even as fiscal consolidation slows.
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The agency views the FY27 deficit target of 4.3% of GDP as modest progress, reflecting the growing difficulty of further consolidation.
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Fitch described the budget as broadly neutral for growth, forecasting FY27 GDP growth of 6.4%.
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Elevated deficits, debt and interest costs remain a constraint, though stronger capital expenditure is supporting medium-term growth potential.
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Indian equities edged higher, with the Sensex and Nifty 50 both turning positive after the Fitch comments.
Earlier:
India’s budget has drawn a measured response from Fitch Ratings, which said the government continues to demonstrate a commitment to macroeconomic stability, even as the pace of fiscal consolidation slows into the next financial year.
Fitch said the government’s plan to target a 4.3% of GDP fiscal deficit in FY27 represents only modest consolidation, but is broadly consistent with its view that further deficit reduction is becoming increasingly difficult. While the deficit remains above pre-pandemic levels, the agency noted that this largely reflects higher capital expenditure, rather than a deterioration in fiscal discipline.
From a growth perspective, Fitch characterised the budget as broadly neutral. The agency maintained its FY27 growth forecast at 6.4%, indicating that the budget neither materially boosts nor undermines India’s near-term growth outlook. Instead, the emphasis appears to be on balancing fiscal credibility with continued support for infrastructure and investment-led expansion.
Fitch highlighted that India’s general government deficits, debt burden and interest payments remain elevated compared with peers, and are likely to decline only gradually. That structural backdrop limits the scope for aggressive fiscal easing, reinforcing the government’s cautious approach. However, the agency said India’s lengthening record of fiscal credibility should continue to support its credit profile over time, particularly as reforms are layered on top of recent progress.
The agency also pointed to scope for further reforms, especially on deregulation, which could help build on recent momentum. Fitch said sustained reform efforts would be key to boosting private investment, improving resilience, and potentially lifting India’s long-term growth trajectory beyond current expectations.
Markets took the comments in stride. Indian equities moved higher, with the BSE Sensex last up around 0.3% and the Nifty 50 turning positive, up roughly 0.15%.
Overall, Fitch’s read of the budget reinforces a familiar message for markets: India’s fiscal path remains credible but constrained, with incremental progress rather than dramatic tightening, and growth still underpinned by public investment and reform momentum rather than short-term stimulus.
This article was written by Eamonn Sheridan at investinglive.com.