International rating agency Standard & Poor's has said India's budget deficit is likely to exceed the government's target of 4.3 per cent for the current fiscal year, which ends in March, a newspaper reported Wednesday.
The target is not likely to be met because of increased government spending, the Hindu Business Line newspaper quoted a Standard & Poor's executive as saying. The story did not say why government spending was up.
Exceeding the target of 4.3 per cent of gross domestic product for the fiscal year that ends in March 2006 could lead to higher interest rates because of increased government borrowing to cover the shortfall, S&P's Asia director for sovereign ratings, Ping Chew, told the paper.
Chew's comments came days after government data showed the deficit between April and August, the first five months of the fiscal year, amounted to 57 per cent of the full-year target, compared with 38 per cent in the same period a year ago.
Chew, however, said S&P had not changed India's sovereign rating since upgrading it in February, because the country's is expected to grow more than 7 per cent this year.
India remained on a 'stable' ratings outlook, a notch below 'investment' grade, Chew was quoted as saying. Until August last year, Standard & Poor's maintained a 'positive' outlook on India's ability to pay off its foreign debt.