Revenue deficit slippage has consequences for capital expenditure

Recently, there has been a lot of buzz around the fiscal deficit and whether the government will meet its target or not. Ratings agencies such as Moody’s and S&P, in deciding what rating to assign to a country, place a lot of importance on governments meeting these targets. Moody’s in November upgraded India’s rating, but S&P didn’t.But why is the fiscal deficit target so important? As the...