InvestorQ : Why is Fitch Ratings not very happy with the stimulus package announced by India?
manisha Kolvenkar made post

Why is Fitch Ratings not very happy with the stimulus package announced by India?

Answer
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Mahima Roy answered.
4 months ago


According to Fitch, the package announced by the government may appear to be large but the fiscal impact may be much smaller. Fitch has claimed that the fiscal impact of the package will be 1% of GDP and not 10% of GDP as claimed by the government. According to Fitch, nearly 50% of the Rs.21 trillion package pertains to fiscal measures that have already been announced or monetary measures of the RBI. Of the remaining 50%, a large chunk is by way of loans by banks with a partial or full government guarantee. Fitch has pointed out that the fiscal conservatism shown by the government could seriously impair GDP growth. However, the same rating agencies would have downgraded India’s sovereign rating if the fiscal deficit had shot through the roof. Hence such comments must be taken with a pinch of salt.