Fitch Ratings said the Indian budget for 2008-09 is 'slightly disappointing', with the failure to achieve its widely expected zero revenue deficit target, the introduction of populist measures and a lack of concrete measures to tackle the fiscal stress points.
The ratings agency said India's fiscal indicators are still lagging behind its peer rating group (sovereigns rated 'BBB-', 'BBB' or 'BBB+') with a higher general government deficit, a much heavier interest service burden and a significantly higher general government debt.
The ratings agency said Indian government needs to implement additional measures if it is to meet its Fiscal Responsibility and Budget Management Act (FRBMA) target of zero revenue deficit by 2009-10 and to continue catching up on the fiscal front with its rating peers.
Fitch said the government has not proposed any concrete measures in the budget to deal with some of the fiscal stress points and no measures were announced for expanding the country's narrow tax base.
The central government forecasts its revenue deficit would decline further to 1 pct of GDP in 2008-09, from 1.4 pct in the previous year and fiscal deficit is forecast to drop to 2.5 pct of GDP, from 3.1 pct in 2007-08.
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