"We are therefore revising our forecast for the financial year 2018-19 fiscal deficit to come in at 3.5 per cent of GDP, from 3.3 per cent previously," BMI Research said in a note.
"The Indian government released its Union Budget for FY2018/19 (April-March) on February 1, which we believe seeks to support growth and job creation at the expense of a slower pace of fiscal consolidation as policymakers aim to achieve a USD 5 trillion economy by 2025," the report added.
The government outlined a fiscal deficit target of 3.3 per cent of GDP in 2018-19 as against a revised estimate of 3.5 per cent in 2017-18, indicating some fiscal consolidation, albeit at a slower pace than that recommended under the Fiscal Responsibility and Budget Management (FRBM) framework.
"While the Indian government loosened its central fiscal deficit target for FY2018/2019, it did not abandon its fiscal consolidation plans completely, but instead push its 3 per cent fiscal deficit target back by a year to FY2019/20," the report said.
The fiscal 2018-19 budget saw a further increase in overall expenditure, with the biggest allocation going to transport, rural development, agriculture, education, and healthcare, as the key focus is supporting long term growth.
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