The Finance Ministry faces a tough balancing act in the Union Budget for FY21/22 as it aims to stabilise the public finances while avoiding economically and politically-damaging spending cuts. The most likely outcome is that it will set ambitious revenue targets and quietly shift some spending off-balance sheet, allowing it to present a smaller headline deficit. This may keep the bond market on the side for the time being. But obfuscation of the true fiscal position risks undermining credibility over the long term.
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