US Tariffs, Global Risks May Keep India's Budget Fiscally Accommodative

• India's upcoming Budget is expected to avoid aggressive fiscal tightening to support the economy amid external pressures, particularly higher US tariffs.
• Rating agencies S&P, Moody's, and Fitch suggest gradual fiscal consolidation, with Fitch projecting a 4.2% GDP fiscal deficit target for the Budget.
• While reforms are viewed positively, any sharp deviation from fiscal consolidation could negatively impact India's credit profile.
• Subdued nominal growth and the need for it to exceed 10% are crucial for significant progress in lowering the debt-to-GDP ratio.
• S&P upgraded India's rating to 'BBB' last year, while Moody's and Fitch maintain the lowest investment grade, all with a 'stable' outlook.

Why It Matters: India's Budget will likely prioritize economic support over aggressive fiscal tightening due to global risks and US tariffs.