MUMBAI: Strong growth and low fiscal deficit could lead to a sovereign rating upgrade for India, a German brokerage said on Monday.
Deutsche Bank analysts said the government's commitment to reduce the fiscal deficit to 5.1 percent in FY2015 and 4.5 percent in FY206 "now looks more credible", pointing out that the number was 5.6 percent in FY2014. Was. Budget 5.8 percent.
Fiscal deficit for FY2025 may come down to 5 per cent against the budgeted 5.1 per cent, due to the Reserve Bank of India (RBI) declaring a higher-than-expected dividend of Rs 2.1 lakh crore.
On growth, the note said it expects real GDP expansion to come in at 6.9 per cent in FY2025 and move down to 6.5 per cent in FY26.
“Strong growth, low fiscal deficit open scope for rating upgrade,” the note said.,
“A faster-than-expected pace of fiscal consolidation could pave the way for an early sovereign rating upgrade for India,” analysts said.
It may be noted that global rating agency S&P last week raised its sovereign rating outlook for India to "positive" from "stable" earlier.
On Friday, official data showed the economy grew at a brisk 8.2 per cent in the March quarter, taking real GDP growth for FY2024 to 7.6 per cent.
The note said the Indian economy has displayed "remarkable resilience" despite prolonged high rates, the Russia-Ukraine war and Covid before that, although a strong uptick in real GDP growth through fiscal 2024 may not materialize. Lower GDP can also be attributed to the deflator. ,
It said nominal GDP growth slowed to 9.6 per cent in FY24, from 14.2 per cent in FY23 and 19 per cent in FY22.But in real terms, GDP growth accelerated from 7 per cent in FY2013 to 8.2 per cent in FY2014 due to decline in GDP deflator from 7.6 per cent year-on-year in FY2013 to 9.4 per cent in FY24 at 1.4 per cent in FY24. Percentage is done. In FY22.
Deutsche Bank also advised caution when reading the headline GDP figures, pointing out that while real GDP grew 8.2 percent, real GVA (gross value added) growth was 1 percentage point lower at 7.2 percent.
Deutsche Bank analysts said the government's commitment to reduce the fiscal deficit to 5.1 percent in FY2015 and 4.5 percent in FY206 "now looks more credible", pointing out that the number was 5.6 percent in FY2014. Was. Budget 5.8 percent.
Fiscal deficit for FY2025 may come down to 5 per cent against the budgeted 5.1 per cent, due to the Reserve Bank of India (RBI) declaring a higher-than-expected dividend of Rs 2.1 lakh crore.
On growth, the note said it expects real GDP expansion to come in at 6.9 per cent in FY2025 and move down to 6.5 per cent in FY26.
“Strong growth, low fiscal deficit open scope for rating upgrade,” the note said.,
“A faster-than-expected pace of fiscal consolidation could pave the way for an early sovereign rating upgrade for India,” analysts said.
It may be noted that global rating agency S&P last week raised its sovereign rating outlook for India to "positive" from "stable" earlier.
On Friday, official data showed the economy grew at a brisk 8.2 per cent in the March quarter, taking real GDP growth for FY2024 to 7.6 per cent.
The note said the Indian economy has displayed "remarkable resilience" despite prolonged high rates, the Russia-Ukraine war and Covid before that, although a strong uptick in real GDP growth through fiscal 2024 may not materialize. Lower GDP can also be attributed to the deflator. ,
It said nominal GDP growth slowed to 9.6 per cent in FY24, from 14.2 per cent in FY23 and 19 per cent in FY22.But in real terms, GDP growth accelerated from 7 per cent in FY2013 to 8.2 per cent in FY2014 due to decline in GDP deflator from 7.6 per cent year-on-year in FY2013 to 9.4 per cent in FY24 at 1.4 per cent in FY24. Percentage is done. In FY22.
Deutsche Bank also advised caution when reading the headline GDP figures, pointing out that while real GDP grew 8.2 percent, real GVA (gross value added) growth was 1 percentage point lower at 7.2 percent.
