India to set stimulus package cap at $ 60 billion to protect credit rating: report

NEW DELHI: Government likely to limit its total spending on coronavirus-related relief to around Rs 4.5 lakh crore ($ 60 billion), due to concerns that overspending could trigger a sovereign downgrade, two senior officials said Government officials.

We have to be cautious as the downgrades have begun to occur for some countries and the rating agencies treat developed nations and emerging markets very differently, the first official told Reuters.

On Tuesday, he warned that India's sovereign rating could be under pressure if its fiscal outlook deteriorates further as the government tries to steer the country through the crisis.

We have already made 0.8% of GDP, we could have room for another 1.5% -2% of GDP, said the official, who is involved in preparing the package, referring to the disbursement of Rs 1.7 lakh crore that the government announced in March that It was aimed at helping the poor through cash transfers and distribution of food grains.

The stimulus plans still to be defined are likely to aim to help people who have lost their jobs, as well as small and large companies, through tax breaks and other measures, both officials said. They declined to be named as the matter is still under discussion.

A spokesman for the finance ministry declined to comment.

Fitch and Standard&poor'shaveindiatiedtoaninvestmentgraderatingthatisonelevelaboveajunkrating,whilemoody'sinvestorsserviceistheonlymajorratingagencytohaveindiaratedtwolevelsabovejunk..

witha40-daynationalblockadehaltingthe$2.9trillioneconomy,andtheblockadeinmanyofindia'smajorcitieslikelytoextend,manyeconomistsexpecttheeconomytostagnateorevencontractthisyear,pressingfurther.governmentfinances.

thesecondofficialsaidgovernmentrevenuesareinatightpositiongivenveryweaktaxcollection,andthefactthatars2.1lakhcroreprivatizationprogramplannedforthisfiscalyearnowlookslikeitwillnotbeastart.

thegovernmentcutthewagesoflegislators,includingtheprimeministerandthepresident,andwithheldincreasesforgovernmentemployeesandpensioners,inanefforttosaveasmuchaspossibletocontrolfiscalslippage.

indiahasafiscaldeficittargetof3.5%ofgdpforthecurrentyear,whichrunsthroughmarch2021,andishighlylikelytobemissedduetoweakrevenuecollection.

inthiseconomicsituation,whenincomesarefallingandtheeconomyneedsgovernmentsupport,wideningthefiscaldeficitisone,thesecondofficialsaid.

consideringourlargestfiscaldeficit...thegovernmenthasalimitedmargintospend,thesecondofficialtoldreuters.

indiahasreportedmorethan35,000casesand1,147confirmeddeathsfromthecoronavirus.

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