New policy measures, both announced and proposed, by the government could adversely impact the country fiscal deficit, according to a report by Moody’s Investors Service.

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Moody's expects the central government's fiscal deficit to reach 3.4 percent of GDP in the financial year ending March 2019, marginally higher than the budgeted target of 3.3 percent of GDP.

As per the report, the government has announced a range of policies to

support the incomes of small enterprises and low-income households. It is also considering additional steps to support farmers facing financial distress.

"In the absence of new revenue boosting measures, the policies will collectively make it harder for the government to achieve its fiscal consolidation objectives," said the ratings agency.

Meanwhile, meeting the short-term fiscal objectives through one-off sources of revenue and cuts in capital expenditure would denote low fiscal policy effectiveness, the report said.

The report comes at a time when the central government is leaning on economic policies ahead of the general elections in May.

In the wake of recent setbacks in assembly elections, the Modi-led government has announced several policies aimed at supporting the incomes of small enterprises and low-income households. In addition, the centre is also considering about taking measures to support the significant agrarian population of the country.

However, as per the report, this could adversely impact fiscal health of the economy.

"The authorities have presented them as permanent measures which would

have a long-lasting impact on India's public finances," said Moody's.

First Published:Jan 25, 2019 3:01 PM IST