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Economy Aug 29, 2013

Food Bill credit negative for India, will raise deficit, warns Moody’s

Mumbai: India's plan to provide cheap grains to the poor is credit negative and will exacerbate the government's weak finances, Moody's Investors Service said in a statement on Thursday.

"The measure is credit negative for the Indian government because it will raise government spending on food subsidies to about 1.2 percent of GDP per year from an estimated 0.8 percent currently, exacerbating the government's weak finances," Moody's said in a statement on August 29.



Moody's currently has a "Baa3" sovereign rating on India, or its lowest investment-grade rating, with a "stable" outlook.

The Lok Sabha approved a plan worth nearly 1.35 trillion rupees on Monday to provide cheap grain to the poor, a key part of the ruling Congress party's strategy to win a straight third term.


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