New Delhi: Finance minister Arun Jaitley said on Friday the government intends to maintain fiscal discipline in the coming years as structural reforms in the last few years have placed the economy on a high-growth trajectory.
Responding to Moody’s Investors Services’ upgrade of India’s sovereign ratings to Baa2 from its lowest investment grade (Baa3) on Friday, Jaitley said India’s track record of fiscal discipline in the last three years speaks for itself and that it shall be maintained.
The government has set a fiscal deficit target of 3.2% of the gross domestic product (GDP) for 2017-18 and 3% for the next fiscal. A high-level committee on fiscal discipline headed by former revenue secretary N.K. Singh has recommended a glide path to bring down the fiscal deficit and debt-to-GDP ratio to 2.5% and 38.7%, respectively, by the fiscal year 2022-23 from 3.5% and 49.4% in 2016-17.
The minister called the rating upgrade a belated recognition of the steps taken in the last few years which he said had strengthened the economy.
“It (the rating upgrade) is a recognition of the reform process in India, particularly those in the last three-four years, which has placed the country in a high growth path. It is also a recognition that India continued to follow fiscal prudence that has brought stability to the economy,” said the minister.
Jaitley said that the current government’s track record in fiscal discipline was impeccable. “We intend to move forward on this,” said Jaitley.
The minister said that many who had doubts about India’s reform process would now seriously introspect on their position.
“We welcome Moody’s rating upgrade of India after 13 years. It is belated recognition of positive steps taken in the last few years,” he added.