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8
June 2018
 |
fiscal deficit(The Total Investment & Insurance Solutions)
Moody's
expects the Indian government to meet its fiscal deficit target of 3.3 per cent
of GDP for the current fiscal based on its commitment to gradual fiscal
consolidation and budget assumptions, even as the US rating agency's Indian
affiliate ICRA said that high global crude prices threaten India's current
account deficit (CAD), according to reports issued on Thursday.
Moody's
Investors Service has rated India's sovereign credit rating at Baa2
stable. The Total Investment & Insurance
Solutions
"Although
Moody's sees some downside risk to budgeted revenue and expenditure targets, it
expects that the government would cut back on planned capital expenditure, as
has occurred in past years, if it is needed to offset any slippage from its
fiscal targets," said Moody's Vice President William Foster.
"On
the revenue side, Moody's sees some downside risk to the government's
assumptions on the collections from the Goods and Services Tax (GST) and
petroleum products excise duty," he said.
The
ICRA report said that high crude oil prices are likely to widen India's CAD and
points to slowing foreign portfolio investments as an area of concern.
Moody's
said that the credit quality of Indian non-financial corporates will remain
supported by a robust growth outlook for the domestic economy and a benign
outlook for global economic growth.
ICRA
believes the non-infra corporate sector has seen some revival in growth and
margin expansion over last 2-3 quarters.
The
American agency said, however, that given their international revenue base,
many rated Indian non-financial corporates remain exposed to increasing
protectionism and tighter monetary policy in the US.
Moody's
feels domestic bank funding availability could weaken as the banking system
struggles with fresh asset quality and governance issues.
ICRA
said that with the accelerated recognition of stressed assets during 2017-18,
the asset quality problems of the banks peaked in March 2018 and further
additions to gross non-performing assets (GNPAs), or bad loans, will decline
with fresh slippages falling to around 3 per cent during the current fiscal,
compared to 7.1 per cent last year and 5.5 per cent in 2016-17.
The
sharp rise in fresh slippages, ageing of earlier NPAs because of limited
resolution, and higher provisioning on accounts referred for resolution under
the Insolvency and Bankruptcy Code pushed up credit provisions and net losses
for the sector, ICRA added. The Total
Investment & Insurance Solutions
"Rural
demand, which has seen a recent pick-up, would be critically dependent on
normal monsoon, hike in MSPs (minimum support prices) and overall thrust on
agri-economy ahead of elections," said ICRA Senior Group Vice President
Subrata Ray. The Total Investment & Insurance
Solutions
Moody's
has a stable outlook on India's power sector which reflects an improvement in
domestic coal availability moderating the fuel supply risk.
Moody's
also said that while distribution utilities have seen an improvement in their
liquidity, the extent to which operational efficiency has improved is still
unclear.The Total Investment & Insurance
Solutions
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