Budget 2014: Do Not Expect Big Spending, Says Religare

Religare Capital Markets does not expect Finance Minister Arun Jaitley to announce any "big" spending plans in his maiden budget due in July.

"Our understanding is that the new government will not move away from the fiscal prudence path...we would not see big time spending by the government unless it has alternative sources of income. From that perspective disinvestment could be one way of going about it," Tirthankar Patnaik, director and strategist, Institutional Research, Religare Capital Markets told NDTV.

Former finance minister P Chidambaram in the interim budget for 2014-15 had proposed a disinvestment target of Rs. 36,925 crore.

"The understanding there is that the fiscal deficit would be a fairly low number. We don't believe that it would be as low as the earlier government had portrayed it at 4.1 per cent," Mr Patnaik said.

Fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings.

The Indian economy is exposed to "shocks" on account of high fiscal deficit and the country's credit outlook will depend on government's initiatives in the next month's budget to contain expenditure and reduce exposure to global commodity prices, rating agency Moody's said on Thursday.

The deficit in 2013-14 fiscal was 4.5 per cent.

"I would also want to hear what the finance minister has to say in terms of taking policy steps to arrest food inflation from a supply side perspective," Mr Patnaik said.

India's wholesale price inflation rose to a five-month high in May, adding to worries that disappointing rains could lead to higher food prices and turmoil in Iraq could cause a spike in global oil prices.

Wholesale prices in May rose a faster-than-expected 6.01 per cent, driven mainly by higher food and fuel costs, government data showed on Monday.

(With agency inputs)