Finance Minister Nirmala Sitharaman will be keen to demonstrate continued fiscal restraint when she delivers her ninth Union Budget on Sunday 1st February. But the current political backdrop is not very forgiving. The most likely outcome is that some measures designed to boost near-term spending in politically-sensitive areas are unveiled. That will need to be combined with higher (and credible) revenue assumptions and a small pull back in other areas to make up for the shortfall and ensure fiscal consolidation remains intact. That should be broadly neutral for demand after four years in which fiscal policy has been a mild headwind.
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