Union Budget 2013 - 14: All eyes on fiscal deficit, govt borrowing figure

The item that everybody will be watching out for will be the fiscal deficit numbers for the current year, says CNBC-TV18's banking editor Latha Venkatesh.

The Finance Minister has already proposed to curb the deficit to 5.3 percent in the current year and 4.8 percent for FY14. Some economists believe that the FM will stick to this year's 5.3 percent number, so that he can promise 4.7-4.6 percent for next year. On the other hand, some believe that he might want to surprise the market with a 5.2 percent this year and a 4.7 percent next year. This will be seen as extremely positive by the market. However, the fact still remains that the market is extremely worried about the exact fiscal deficit number, because government's borrowing will be dependent on that. Expectations are that it will come between Rs 5.1 and 5.4 lakh crore, which is very close to the Rs 5.1 lakh crore that is estimated for the current year. Usually the borrowing number is slightly higher than the actual deficit number, so expectations are that the gross borrowing number will be around Rs 5.4 and 5.9 lakh crore. That number was Rs 5 lakh crore in the current year. If the government's borrowing comes in anywhere south of Rs 6 lakh crore, the market may be happy. What bond markets are really worried about it the net market borrowing figure, which is arrived at by subtracting Rs 95,000 crore for the redemption of bonds issued many years ago. So the net market borrowing program is expected to come between Rs 4.4 lakh crore and Rs 4.9 lakh crore. Again this is very close to the current years Rs 4.67 lakh crore. So there expectations that the net borrowing may be lower than the current year's Rs 4.67 lakh crore, but there are some who believe it could be slightly higher at Rs 4.9 lakh crore. Now while this number will be watched, there could be a googly here because there finance ministry sources say they want to redeem Rs 40,000 crore of FY15’s bond redemption in the current year itself. This is to ease the process in FY15 since there are several bonds coming up for redemption in that year. So one look at this market borrowing number may not be enough. You will have to bide your time and check whether this Rs 40,000 crore is included or excluded. The other numbers which the market will watch out for will be the assumptions of the fiscal deficit, the assumed growth in tax revenues and the assumed growth in expenditure.