- Finance Minister Arun Jaitley has begun presenting the Union Budget in Parliament - seen as the first major test of the Narendra Modi government's reform credentials.
New Delhi: Finance Minister Arun Jaitley has begun presenting the Union Budget in Parliament - seen as the first major test of the Narendra Modi government's reform credentials.
The key questions that have been asked for weeks now: will the new government make unpopular decisions in its first budget? Will it be a budget of populism or of fiscal prudence or will he do a balancing act? (Top 10 Expectations From Arun Jaitley)
Industry has said that the Acche Din or good days promised by Prime Minister Narendra Modi in his election pitch means a boost in growth. For the Aam Aadmi or common man, it means a respite from rising prices. (First Budget Test of PM Modi's Reform Mettle)
Mr Modi, 63, won a landslide general election victory in May with the pledge to boost growth and create jobs for the 1 million people who enter the country's workforce every month. He has since warned of the "bitter medicine" needed to nurse the economy back to health from high inflation and the worst slowdown since free-market reforms in the early 1990s unleashed an era of rapid growth. (Budget 2014 May Not Have Extremely 'Bitter Pills', Says Citrus)
The finance ministry's economic survey on Wednesday laid out the government's vision for a sustainable reduction in the fiscal deficit through a lower food and fertilizer subsidies and broadening India's tiny tax base. (Modi Sarkar's Budget: 10-point Cheat-Sheet on What Economists Expect)
The report's tone increased speculation that Mr Jaitley will give a higher, more realistic fiscal deficit target for this fiscal year than the 4.1 percent of gross domestic product set by the previous government. (Also Read: Income Tax Expectations From Budget 2014)
Mr Jaitley's promises of bold budget decisions and broadsides against the "mindless populism" of his left-of-centre predecessors have proved a hit with investors, helping the benchmark BSE stock index to a record high last week. (2014 Union Budget: What the Indian Auto Industry Expects)
It is crucial for the BJP to win those elections. While it has an unassailable majority in the Lok Sabha, it is in a minority in the Rajya Sabha and a good performance in the state elections will mean an improvement in its numbers in the upper house. To push its reforms-oriented legislation, the Modi government will need the approval both Houses of Parliament.
"It is but natural for the new government to move ahead gradually so as to avoid policy-induced distortions," said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.
The government has tried to keep rural voters sweet by extending a temporary subsidy for sugar mills, benefiting farmers in Maharashtra, one of the states where elections are due.