KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
India plans to shift its fiscal policy framework from targeting a specific fiscal deficit to focusing on the ratio of government debt-to-gross domestic product (GDP) after the fiscal year 2025-26, according to TV Somanathan, Finance Secretary of the Ministry of Finance.
Key Points for Investors and Policy Makers:
Policy Shift:
- Current Target: Historically, India has aimed for a fiscal deficit of 3% of GDP but has struggled to meet this goal.
- New Focus: Post-2026, the government will prioritize the debt-to-GDP ratio as the primary fiscal policy anchor.
Rationale for Change:
- Economic Resilience: Somanathan highlighted that India can sustain a fiscal deficit above 3% due to its high nominal growth rates, which help maintain fiscal sustainability.
- Rating Concerns: Rating agencies have flagged India’s high debt-to-GDP ratio as a significant factor affecting its sovereign rating.
Fiscal Targets:
- Current Targets: The federal government aims to reduce the fiscal deficit to 4.9% of GDP by March 2025 and below 4.5% by March 2026.
- Debt Reduction Commitment: The government is committed to reducing its debt as a percentage of GDP, with annual fiscal deficit targets set to ensure a gradual reduction in debt levels.
Debt Estimates:
- Fitch Ratings Projection: India's debt is estimated to remain around 80% of GDP until the fiscal year 2027-28.
- Long-term Strategy: The specifics of the debt reduction pace and extent post-2026 remain undefined, but the commitment to gradual debt reduction is clear.
Implications for Investors:
- Policy Predictability: Moving to a debt-to-GDP ratio focus could provide a more predictable and sustainable fiscal policy framework.
- Economic Stability: A disciplined approach to debt management could enhance investor confidence in India's economic stability.
Conclusion:
India’s planned shift from fiscal deficit targeting to a debt-to-GDP ratio focus represents a strategic move to ensure long-term fiscal sustainability. By prioritizing debt reduction and leveraging high nominal growth rates, the government aims to stabilize its economic framework while addressing rating agencies' concerns. Investors and policymakers should monitor this transition closely, as it will shape India's fiscal landscape and economic stability in the coming years.
Comments
Post a Comment