In some good news to the Indian government which has been facing flak on economic front, credit rating agency Moody's has said that it is maintaining its stable outlook on India's rating. However, it has warned that several challenges still remain. The most important being the country's fiscal deficit. Economic growth has slowed in India in recent months, and the country has suffered mild erosion in its economic profile, with widening trade and current-account deficits.
The central government's fiscal deficit exceeded official projections for the year ended March 31, 2012, reaching 5.9% of GDP. In addition, inflation remains stubbornly high despite the Reserve Bank of India's (RBI) tightening policies. The government in-order to raise revenues has tried several methods but has found little success in that. The government must find ways to reduce the fiscal deficit that threatens to undermine the country's credit standing and possibly trigger a downgrade to junk status.
The central government's fiscal deficit exceeded official projections for the year ended March 31, 2012, reaching 5.9% of GDP. In addition, inflation remains stubbornly high despite the Reserve Bank of India's (RBI) tightening policies. The government in-order to raise revenues has tried several methods but has found little success in that. The government must find ways to reduce the fiscal deficit that threatens to undermine the country's credit standing and possibly trigger a downgrade to junk status.
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