Here is a verbatim transcript of the exclusive interview with Sharmila Wehlan on CNBC-TV18. Also watch the accompanying video.

Q: Just a broad-brush stroke on how high or low your expectations are on the budget document itself?

A: We saw the Minister of State presenting its economy survey and in that they have thrown in the whole kitchen sink in terms of recommendations on straight from lifting FDI limits on insurance sector to high technology or on how much to raise through privatization. I think we will only know when the budget comes out on Monday. One will see consolidation with this new government and I would expect the budget deficit to be at 8.3% in the current fiscal year. Coming down towards 7.9 and then at 4.8 in fiscal 2010-11 and particularly this year. I expect the government to make tangible moves to bring expenditure back into control. I am looking at expenditure rising by about 6% as compared to 23% last year and finally on the revenues side the focus will be on raising non-tax revenues and there I am reasonably bullish that we will get some signal on Monday in terms of concrete steps towards privatization which PSUs would set as the timelines for that.

Q: How critical would this budget and the direction on the fiscal deficit roadmap be for rating agencies because there was a feeling that they held out for the Union budget and if indeed the roadmap is not presented then the much feared rating downgrades may follow, is that an accurate assessment in your eyes?

A: I think what we have seen in the fiscal year that has gone by, we have seen a massive deterioration in the public finances but the actual numbers came in with what was being expected and of course market expectation ratings are watching very closely what the government is planning to implement going forward. If the government fails to deliver, the ratings would stay on hold rather than being downgraded because clearly even the rating agencies can see that with the growth story beginning to pick up towards the end of this year, there will be cyclical buoyancy to tax revenues which will help the budget deficit even with the government doing nothing on the expenditure side. On the expenditure side there were many one-off items that fall off. Judging by the unexpected increase in the fuel prices this week, the government is signalling that it’s pretty serious.

Q: The other disappointment post the interim budget was the giant borrowing program, its impact on the bond market and then its spill over impact on the equity markets, are you worried about what you might hear on Monday from that side as well?

A: We will be certainly looking at the public debt and what the borrowing requirements are, right now the borrowing requirements are clearly going to rise but it is less than what I was expecting say about a quarter back. The implications for the rise in government borrowing isn’t really from growth of equity markets this year, it’s more for next year when the private sector is going to come back in the market to raise its own borrowing.

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