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Foreign brokerage and financial services firm Deutsche Bank has taken a temperate view on how much the government can do in terms of policy reforms in the 2014-15 Union Budget, to be presented on July 10.
In its India Economics Weekly report dated June 27, it said meeting the market’s sky-high expectations might be a too much to ask for. “A presentation that will simultaneously be growth-supportive, anti-inflationary and committed to fiscal consolidation might well be on the market’s wish list; but that would surely be a tall order for this fledgling administration,” said the report, authored by economist Kaushik Das and chief economist Taimur Baig.
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Since there is little time left to the budget, it may be more prudent to look for signs on the government’s outlook towards fiscal responsibility.
“Given the paucity of time, it would be unreasonable to expect the Budget to be a game-changer in terms of policy announcements, but the market will be looking for signals underscoring fiscal responsibility,” it said.
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Deutsche Bank believes the government’s fiscal deficit can realistically be set at 4.5 per cent of gross domestic product. It said as long as the right signals were in place, the government should be given the benefit of the doubt, as fiscal consolidation wasn’t possible overnight.
The budget is set to be presented on July 10th.
