However, unlike 2008, the government this time does not have the firepower to boost spending for nurturing the demand, while it might shift the load onto shoulders of private sector through policy reforms.
The big ticket announcements would be awaited in most of the areas that concern foreign investment threat currently. The sectors in focus would include infrastructure, retail, aviation among others where foreign funds would require a boost. Infrastructure debt funds would be most crucial to fast track the investment growth during the period. A combination of high interest rates as well as policy paralysis had destroyed much of the investment projects during FY12.
Meanwhile, the government has already declared its failure on fiscal deficit front, as it was targeted at 4.6 per cent, and now seen above 5.5 per cent. India Inc would be eyeing the measures to bring down the fiscal deficit, that is essential to cap the rising bond yields. Bond yields have risen as govt attempts to raise more money to finance its expenditures. Rising bond yields also put pressure on provisions of banks.
India Inc might have been curious to know the big list of export boosting ideas from this budget, but it would not be easy task for Mukherjee to revive the exports industry of India within a year, so as to prove effectiveness of this budget this year. Current account deficit and falling rupee would be playing the mathematics in FM's mind to decide ways to reduce imports and encourage exports.
Meanwhile, Mukherjee's exercise would not end with defining the new targets to be achieved this year, but a clear roadmap would also be required to justify the targets, unlike last time. The twins deficit of fiscal and trade would be the key to bring the borrowing costs down.