Laying down his reputation meet deficit reduction targets, the ministry of finance minister p. p. chidambaram may be forced to cut, in the upcoming fiscal year spending provide budget, make positive income hypothesis.
Cut costs will pit p. chidambaram congress to impulse, increase the populist spending early in the election of 2014, and in Asia's third-largest economy slowed sharply increased risk.
Instead of spending cuts, because people's expectations, Thursday's fiscal year budget from next month, bet increased income fund spending increased by 16%, and to reduce the budget deficit of 4.8% of GDP.
To do this, India's sputtering economy must speed up to about 6.5% to 7% of the growth, is expected to 5% of the current fiscal year - ten years low, a country, not long ago to double-digit expansion and disappointed.
Budget also point out that India will sell about 1 billion dollar of government concern, and generate an income of $750 million abusive telecommunications.
Also imagine capped subsidy accounts for 2% of GDP, 2.6%, this year's limit, ratings agency standard &poor's a possible violation of warning.
Keep the lid on spending, but, p. chidambaram may be able to provide.
To his party's populist tendency, p. chidambaram has been successfully curb spending this year, the last few months, the deficit will drop to 5.2%, more than 5.3% of the revised target track.
However, the tightening policy comes at a price. In the fourth quarter of last year 4.5% of the amazing growth weak emphasize the risk of cutting government spending, some economists is forecast to grow by 5% of the backward and a quarter or longer.
P. chidambaram retained some of the rooms and there is a greater distribution plan spending cuts in spending, barclays bank economist said: "siddhartha SangYaEr.
The so-called plan expenditure is mainly refers to capital spending, can be twice the result with half the effort, this is in need of help, but economic growth in politics is subsidies, easier to delay.
"So, if he can not reach the income, he can cut some plan of spending, but will again harm economic growth, SangYaEr said."
Now save, spend?
One way p. chidambaram can achieve deficit goal, even if the income is lower than the first half of this year in spending increased spending in the operation, the deadline for 2014 years 5 months before the parliamentary elections, to resist.
In this year, p. chidambaram cuts to spending nearly 18%, to 4.3 trillion rupees, puts forward the plan of spending, this is based on consumer spending, by 31.7 billion rupees, more than the budget estimate 10 trillion rupees.
This let him this year's fiscal deficit down to close to 5.1% target, economic growth is expected to 7.6%, which in fact prove to be very optimistic.
Trim the deficit, help protect against foreign threats, India "bricks" economy has its credit rating downgraded to "junk", thing long p. chidambaram would not like to see happen in his watch became the first.
His new budget will prove the same plasticity.
"It has enough flexibility to deal with the risk of ascending and descending, the past experience shows that" deepak, darth gupta, in the ministry of finance chief economic adviser, told Reuters.
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This flexibility is necessary, because the budget to make optimistic assumptions.
Don't be discouraged by repeated failures, in order to meet the target unloading interests in India company, plans to sell 540 billion rupees dollars worth of stock April in the fiscal year, including in the state-owned enterprise stock value compared to 400 billion rupees, reduces 240 billion rupees, this fiscal year.
The stock sales target is equivalent to two thirds of the total is 1.5 billion dollars, the company put forward in 2012. , the investors are digestion $2 - $300 million shares in many companies cut their controlling shareholders holding 75% of the ceiling, June 30 effective abide by.
", $40 billion target, looks very ambitious said to me, "Turner Erajuuri, Helsinki FIM India's portfolio manager.
"It is difficult to sell, in this kind of market conditions. The market will be very unstable, rupees will continue to be very weak," she said.
Also, the budget 40.85 billion rupees from debt-ridden telecom license and other income hypothesis, objective analysis said, looks hale and hearty.
Goldman sachs, HSBC and rating agencies CRISIL, India is expected to miss its fiscal deficit target, said 5% of GDP more likely.
"Their income will have deficiencies, they will make up for spending squash, said:" shah jahan, Jill aziz, JPMorgan chase (JPMorgan) economists, expected annual economic growth, about 5.6-7%, in the upcoming fiscal year.
 



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