From convincing sceptical bond investors that the fiscal deficit can be contained to concerns that El Nino will devastate agricultural crops, any new government will face urgent and critical challenges with no easy solutions.
Expectations the Bharatiya Janata Party (BJP) and its leader Narendra Modi will win elections that started this week with a new approach to country's economic problems have helped send shares to record highs and the rupee to an eight-month peak.
To some investors that optimism is misplaced. Should Modi win the elections, his government will face its first credibility test with markets when he delivers a budget by June or July that will need to show the country can realistically contain its fiscal deficit.
That will be followed by key decisions on the current account deficit, on the relationship with a hawkish Reserve Bank of India ( RBI), on how much funds to sink into troubled state lenders, and on how to get states to promote private investments.
The BJP promised fiscal discipline and banking reforms among other policy plans when it announced its election manifesto on Monday, but gave no details.
1. Delivering a budget that contains the fiscal deficit
Any new government will need to fix finances that are in dire straits, and about to get worse.
To achieve a revised fiscal deficit target of 4.6 per cent of gross domestic product (GDP) for the year ended in March, the Congress-led government cut spending by $13 billion and pushed about $16 billion in subsidy costs into the new year...
Expectations the Bharatiya Janata Party (BJP) and its leader Narendra Modi will win elections that started this week with a new approach to country's economic problems have helped send shares to record highs and the rupee to an eight-month peak.
To some investors that optimism is misplaced. Should Modi win the elections, his government will face its first credibility test with markets when he delivers a budget by June or July that will need to show the country can realistically contain its fiscal deficit.
That will be followed by key decisions on the current account deficit, on the relationship with a hawkish Reserve Bank of India ( RBI), on how much funds to sink into troubled state lenders, and on how to get states to promote private investments.
The BJP promised fiscal discipline and banking reforms among other policy plans when it announced its election manifesto on Monday, but gave no details.
1. Delivering a budget that contains the fiscal deficit
Any new government will need to fix finances that are in dire straits, and about to get worse.
To achieve a revised fiscal deficit target of 4.6 per cent of gross domestic product (GDP) for the year ended in March, the Congress-led government cut spending by $13 billion and pushed about $16 billion in subsidy costs into the new year...
Source: Today Business News
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