All eyes are on the full budget for 2014-15 — likely to be presented in the first week of July — amid anticipation that the finance minister will unveil a series of measures aimed at boosting investment, raising income levels and creating jobs to help the economy claw out of a crippling slowdown.
Analysts said the budget will hold out cues on how the government plans to deliver on some of its electoral promises including jobs, price control and speedier implementation of infrastructure projects. Focus will also be on how the new finance minister balances the budget books.
“The budget document should give the right signal with respect to subsidy policy and overall fiscal stance. The budget may also benefit from articulating appropriate contingencies for a probable disruption to food production this year,” Deutsche Bank India chief economist Taimur Baig said in a recent research report.
A lot is also riding on the government’s plans to kick-start infrastructure projects and analysts expect the finance minister to announce steps in the budget.
Infrastructure investment peaked at 8.4% of gross domestic product (GDP) in 2010-11 and has since then declined over the past three years. Increasing investments in infrastructure will lay the foundation for removing supply-side bottlenecks in the economy and sustaining it on a high-growth path.
“We will closely watch government announcements with regard to infrastructure investments,” Morgan Stanley, a global investment bank, said in a research report.
Investors are also keenly watching for steps that the government will unveil on revival of the manufacturing sector, direct and indirect tax reforms, capital account liberalisation including raising FDI caps in key sectors and opening up the bond market further to foreign investment.
Analysts also expect concrete steps to tame inflation that was major issue during the polls.
“Agriculture, particularly fruits and vegetables, milk, eggs and meat and fish, will also see attention as only the government can bring food inflation down by raising supply and cutting wastage,” Credit Suisse said in a report.