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Market participants will look out for numbers such as fiscal deficit, gross domestic product growth, and inflation for the next financial year in the budget speech. Since major policy announcements and changes on the taxation front are not expected during the interim budget, markets are more likely to be watchful for government's progress on fiscal consolidation. We expect the government to meet the fiscal deficit target of 4.8% of GDP for 2013-14 (Apr-Mar). Market participants will closely watch the FY15 fiscal deficit target, which will determine the size of market borrowing for the next fiscal year. The target is widely expected to be set at 4.2% of GDP. However, some in the market believe that it may not prove to be a major event as the interim budget is designed to meet government expenditure for only the first four months of the next financial year. The final budget can differ widely from the interim budget.
Market participants will look out for numbers such as fiscal deficit, gross domestic product growth, and inflation for the next financial year in the budget speech. Since major policy announcements and changes on the taxation front are not expected during the interim budget, markets are more likely to be watchful for government's progress on fiscal consolidation. We expect the government to meet the fiscal deficit target of 4.8% of GDP for 2013-14 (Apr-Mar). Market participants will closely watch the FY15 fiscal deficit target, which will determine the size of market borrowing for the next fiscal year. The target is widely expected to be set at 4.2% of GDP. However, some in the market believe that it may not prove to be a major event as the interim budget is designed to meet government expenditure for only the first four months of the next financial year. The final budget can differ widely from the interim budget.
