What to expect from the interim budget

The finance ministry will be keen to include some election sweeteners in the interim budget that is due on 1st February. But it will also want to demonstrate fiscal rectitude. The most likely outcome is that the deficit target for FY18/19 is revised up slightly, while a smaller deficit target is set for FY19/20. But the targets are likely to be based on ambitious projections for revenue collection and nominal GDP growth. If these fall short, spending cuts would follow the election, which would weigh on economic growth.