Rating agencies led by Crisil have raised concerns over the curtailed capital spending to cap fiscal deficit at 3.5 per cent for FY18, and have warned the higher target for next fiscal will delay the fiscal consolidation process by three years.
“It is the productive spending in the economy that has seen a compromise, making way for revenue spending,” Crisil said in a note on Friday.
Meanwhile, it’s peer Icra termed the “sharp rise” in revenue deficit a “concern”.
Terming the inability to meet fiscal deficit target for four consecutive years as a big “credit negative” for the sovereign, global rating agency Moody’s doubted if the country will meet even the 3.4 percent fiscal gap target for FY20.