New Delhi. Fitch Ratings on Friday said India's post-election budget confirms that the Modi government is committed to reducing the fiscal deficit in FY2024-25 and FY2025-26. In the FY2024-25 budget, the government has cut the fiscal deficit target for the year ending March 2025 to 4.9 per cent of GDP from 5.1 per cent in February's interim budget.

The government's fiscal deficit target for FY2024-25 is well below the 5.4 per cent GDP growth target the rating agency had estimated when it affirmed India's 'BBB' rating with a stable outlook in January 2024. Fitch said, “We believe this is achievable, as the government's assumption of 10.5 per cent nominal GDP growth in FY2024-25 is modestly lower than our current forecast.”

Fitch said, "We think the government can also achieve its target of reducing the fiscal deficit to less than 4.5 per cent of GDP in FY2025-26. The government's record of achieving or outperforming its budget deficit targets in recent years has improved its fiscal credibility. The fiscal deficit in FY2023-24 was 5.6 per cent, well below the target of 5.9 per cent.