New Delhi, February 9
The Union Budget for 2025-26, presented on February 1, reinforces credibility in India's fiscal consolidation roadmap while emphasizing boosting the economy's overall growth potential, CareEdge Global Ratings said in a report.
Both these aspects -- commitment towards fiscal consolidation and emphasis on boosting the economy -- support CareEdge Global's of India at 'CareEdgeBBB+/Stable'.
At the same time, CareEdge Global believes that more needs to be done to address other credit weaknesses, such as high interest-to-revenue metrics and low-income levels over the coming decade.
The central government has stayed on the path of fiscal consolidation with fiscal deficit-to-GDP budgeted at 4.4 per cent in the fiscal year ending March 31, 2026, in line with the glide path envisioned in the previous budget announcements.
The other noteworthy aspect of the Budget was the continuation of the capex focus. Revenue expenditure-to-GDP is budgeted to moderate to 11 per cent in 2025-26 from 11.4 per cent in 2024-25, while the capex-to-GDP is budgeted to remain steady at 3.1 per cent.
The Budget provided the future roadmap for the central government's debt-to-GDP, which remains on a downward trajectory to reach 50+-1 per cent by end-2030-31, from the estimated 57.1 per cent in 2024-25.
CareEdge projects India's General Government Gross (GGG) debt, which includes state government debt to remain on a downward trajectory in the medium term.
"Globally, the GG debt-to-GDP levels of most other major economies are projected to show a rising trend going forward. However, India is among a few major economies where the GGG debt-to-GDP is projected to fall," CareEdge Global Ratings said.
India continues to remain the world's fastest-growing major economy. The government's focus on capex-led growth has supported economic growth post-pandemic.
However, the economic momentum witnessed some deceleration, with real GDP growth estimated at a four-year low of 6.4 per cent in 2024-25, as per the First Advance Estimate released recently.
The Budget addressed some key economic concerns on the growth front.
CareEdge Global believes the reduction in income tax announced in the Budget will likely provide the much-needed impetus to domestic consumption.
In the Budget for 2025-26 tabled on February 1, the finance minister had announced that no income tax will be payable on income up to Rs 12 lakh, providing significant relief to taxpayers, especially the middle class. Earlier, this limit was Rs 7 lakh.
- ANI