India Says It May Review Fiscal Gap Target Nearer to Feb. Budget

(Bloomberg) -- India will decide on reviewing fiscal gap target nearer to the next budget in February after announcing a $20 billion tax-cut stimulus for companies last week, Finance Minister Nirmala Sitharaman said.

“At this point of time we are not revising any target,” Sitharaman said in at press briefing on Sunday in New Delhi. “The decision will be taken later.”

India will also decide on extra market borrowing later in the year, she said. No decision has been taken on cutting personal income tax rates, Sitharaman said.

The surprise decision to lower corporate taxes has raised concerns about India’s fiscal discipline. Tax cuts by the Indian government for companies will invariably lead to higher central and general government fiscal deficits, absent equivalent revenue-generating measures, according to S&P Global Ratings.

Sovereign bonds declined Friday after the announcement. The benchmark 10-year bond yield climbed 15 basis points , the most for the notes since January, to 6.79%. Stocks surged along with the rupee.

To contact the reporters on this story: Vrishti Beniwal in New Delhi at vbeniwal1@bloomberg.net;Rahul Satija in Mumbai at rsatija1@bloomberg.net

To contact the editor responsible for this story: Shamim Adam at sadam2@bloomberg.net

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