Modi's Budget 2018 dilemma: Win rural voters or stick to deficit plan

Indian Prime Minister Narendra Modi has a tough balancing act in this week’s budget: maintaining fiscal prudence or handing out cash to placate rural voters ahead of next year’s election.

After scoring a rare sovereign upgrade late last year, Modi wants to keep global investors and credit-rating companies on his side. Key to that will be sticking his goal to narrow one of Asia’s largest budget deficits. 

Bond investors have already concluded that Finance Minister Arun Jaitley will deviate from those plans when he delivers his budget on Thursday, with yields climbing 96 basis points in the past six months,