NEW DELHI: Finance Minister Nirmala Sitharaman on Wednesday told MPs in Parliament that there was no risk of India’s sovereign rating being downgraded as a result of higher deficits. Wednesday saw the Rajya Sabha return the Finance Bill 2021 without suggesting any change in a move that completes the Parliamentary approval for Union Budget 2021-22.
On Tuesday, the Lok Sabha had approved the Finance Bill 2021—the tax proposals for the next fiscal year—after certain amendments including raising the provident fund ceiling for tax-free interest to Rs 5 lakh and allowing platforms such as Amazon to not be liable for the equalisation levy as long as the goods and services listed are owned or provided by an Indian permanent establishment of the overseas entity.
The Upper House debated the bill on Wednesday, but returned it without suggesting any change or amendment. During the debate, Sitharaman said that the government does not “see a risk of” a sovereign rating downgrade. “India enjoys an investment-grade rating and we are not foreseeing any change or any chance of a downgrade due to us incurring higher deficits,” she said.
Noting that economists and rating agencies are of the opinion that governments need to spend to put pandemic-hit economies back on track. “So, globally, that is the advice everybody is receiving and we are also following. So it shouldn’t hurt our rating,” she pointed out.
On GST compensation to be paid to states following the implementation of the Goods and Services Tax (GST), the minister said there are no dues pending for period prior to the pandemic. For 2020-21, Rs 2.17 lakh crore is due and money was borrowed and given to states, she said, adding that over Rs 30,000 crore will be released to states within March.