New Delhi, Sep 10
Goods and Services tax (GST) reforms are expected to boost domestic consumption without disrupting the trend of fiscal consolidation, a new report has said.
The Centre may reduce government spending in the next two quarters to maintain fiscal consolidation trends, according to a report from ratings agency Moody’s.
The government estimates a net foregone revenue of Rs 48,000 crore ($5.4 billion) for this year, based on FY24 data calculations. The GST reform may impact the government's efforts to reduce debt, the report said.
"India continues to have the weakest debt affordability among investment-grade sovereigns, with interest payments amounting to about 23 per cent of general government revenue in fiscal 2024-25," the note said.
The rating agency reported that the revenue loss from the rate adjustment is expected to exceed government estimates, with a more pronounced strain in coming years.