How they reported our Budget?

By Vijay Kumar

Here's a few selected reports on our budget from the foreign press.

LONDON - Standard & Poor's Ratings Services said India's (BB+/Stable/B) budget for 2005/2006 delivered today in New Delhi shows a lack of success in reducing the country's deficit burden.

"Government debt is the main obstruction in the path of further improvements in India's credit ratings, and stands out in contrast to the many positive economic indicators displayed by India in recent years," said Standard & Poor's credit analyst Ping Chew, Singapore-based head of Asia Sovereign and International Public Finance Ratings Group.

The combined central and state government deficits will amount to 10% of GDP in the near term, leading the consolidated debt of the central and state governments to rise gradually for the next few years from more than 80% of GDP currently.

"The 2005/2006 budget does not provide for any significant reduction in the fiscal deficit, following a rather modest reduction in the previous year," Mr. Chew added.

"Given the strong growth being experienced by the Indian economy, it is surprising that better progress could not be made. Conversely, it must give rise to worries concerning India's future fiscal performance should growth rates become less favorable," he noted.

The budget should also be seen in the context of its track record, where budget forecasts were missed in four of the past five years. The budget is also subject to changes, given the political dynamics, especially due to the government's minority representation.

Although the fiscal outcome continues to disappoint, a more positive aspect of the budget is the emphasis given to infrastructure spending and tax reform. Likewise, the solid 21% growth in taxation revenue in 2004/2005, and an expected growth of similar proportions this year, must be regarded positively in relation to India's ability to service its debt burden. For example, in 2003/2004, interest expense took up 47% of central government revenue, while in 2005/2006 the ratio is expected to fall to 38%.

Indian defence budget hike not helpful trend: Pak

Pakistan today said the increase in Indian defence budget was not a "helpful trend" and the region needed nuclear restraint and conventional balance.

On the increase for defence allocation in the Indian budget presented today, Pakistan Foreign Office spokesman Masood Khan told a media briefing in Islamabad that "it is not a helpful trend".

LONDON, FEBRUARY 28: NRI industrialist Lord Swraj Paul described the Indian Budget as "pro-development and market-friendly". "It is a good budget and it is also market-friendly and pro-development Budget," Lord Paul, British ambassador for overseas business said reacting to the Budget for 2005-06 presented by Finance Minister P Chidambaram in Indian parliament. "The Finance Minister has also simplified the tax structure and has made enough allocation for education, health and employment sectors," he said.