Edelweiss expects temporary relaxation on deficits to support growth, government to accrue savings of 0.8 percent of GDP due to lower oil prices and tax buoyancy and subsidies & boost to renewable energy sectors.
Michael Kurtz of Nomura expects infrastructure investment to be hiked to 2.5% of GDP in the Budget and for it to come through pruning of subsidies and more asset sales. He expects a very strong Budget with focus on reforms.
Aditya Birla Money has come out with its budget expectations report. "The government is likely to pursue spending to push economic growth, it is unlikely to spend lavishly, as it would want to stick to its Fiscal Deficit targets", says the report.
Prabodh Agrawal, president and head of research at IIFL Institutional Equities expects announcements pertaining to increase in spending in physical and social infrastructure in the Budget. He adds that this increase will partly be funded through increase in taxes primarily indirect taxes.
According to Religare Retail research, the Modi Govt.s first full-year budget due 28 February is widely expected to deliver a credible medium-term fiscal consolidation and growth revival plan for India. While we expect the FY15 fiscal deficit target of 4.2% to be met despite soft tax collections, says the research firm.
Market expert Udayan Mukherjee says experts are talking about the fiscal deficit and ease of doing business or strong framework for corporate India, but none of them are as critical as the steps the government will take in order to revive growth.
Dr Subir Gokarn, former deputy governor RBI and now head of research, Brookings Institution, says it is important that the government signal its commitment to fiscal consolidation. At the same time, Jaitley needs to find ways to finance and get infrastructure sector back on track, he says
Union budget is likely to reiterate governments economic and governance agenda. It should also define fiscal deficit target at 3.6% for FY16. Government may also aim to covert some ordinances into law.
A downward revision in nominal gross domestic product in the current fiscal year to March 31 would require spending cuts of around 91 billion rupees (USD 1.5 billion) to hit Jaitley's fiscal deficit target of 4.1 percent of GDP, the source added.
In an interview to CNBC-TV18, Jahangir Aziz, Chief Economist, JP Morgan said if 4.1 percent appears to be a big target to meet despite a 50 percent decline in oil prices and all-time high equity market, there is something seriously wrong with the way the government estimated direct and indirect tax collection
According to Subir Gokarn Director - Research Brookings India since increasing expenditure for infrastructure would be a key challenge, government needs to find revenues to hike capex and improve growth.
As finance minister rises to present his second Budget, his message will be clear - the government will stick to its commitment to pursue the path of fiscal consolidation. This budget may also end up being a 'Make in India Budget' with the government announcing definitive steps to boost manufacturing.