PM Modi's July 5 budget key to reviving India's animal spirits

Analysts expect the new Modi government's first budget on July 5 to tweak fiscal levers to give a boost to the economy and get it back on a faster growth track

India's economy showed signs of fragility in May after April's uptick, suggesting a sustained recovery needs a fiscal stimulus from newly re-elected Prime Minister Narendra Modi's government.

Overall activity from eight high-frequency indicators compiled by Bloomberg News show the economy lacked momentum, with the dot remaining unchanged from a month ago. A renewed tightness in liquidity conditions kept business activity subdued. The dashboard is a measure of “animal spirits,” a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action.

As gross domestic product growth slowed to a five-year low of 5.8% in the first quarter