How Many statement/statements is/are CORRECT regarding Fitch Ratings' forecasts for India's fiscal deficit?

1. Fitch Ratings forecasts the fiscal deficit to reach 5.4 per cent of GDP in FY25, above the budget target.

2. The government's emphasis on deficit reduction helps stabilize the debt ratio over the medium term.

3.Fitch Ratings expects India to achieve a real GDP growth of 6.5 percent in FY25.

Solution

•     According to international credit ratings agency Fitch Ratings, the interim Budget does not significantly change the sovereign credit profile of India even as the government has aimed at slightly faster pace of deficit reduction. •     India’s fiscal deficit and government debt ratio are high relative to peer medians, but the government’s emphasis on deficit reduction helps to stabilise the debt ratio over the medium term. •     Fitch Ratings’ forecasts fiscal deficit to reach 5.4 per cent of GDP in FY25, above the budget target, due to more conservative revenue forecasts in the next year. “But the government has shown a recent record of achieving fiscal targets, which gives credibility for it to reach the 5.1 per cent target. •     Fitch Ratings expects the continued emphasis on capex investment to remain supportive of the growth outlook in FY25. •     It sees India clocking a real GDP growth of 6.5 percent in FY25.