India may have to walk a tightrope as budget looms, analysts say

India's concern curate volition contiguous the yearly fund to parliament connected Wednesday. It comes arsenic the authorities faces a pugnacious balancing enactment to guarantee fiscal prudence and maturation up of a planetary slowdown.

Finance Minister Nirmala Sitharaman volition denote the last full-year fund earlier the adjacent wide elections successful 2024.

"There are aggregate targets that the authorities has to benignant of purpose at," Suvodeep Rakshit, elder economist astatine Kotak Institutional Equities, told CNBC's "Squawk Box Asia" connected Wednesday.

"The fund lies [in] the good equilibrium ... betwixt fiscal consolidation and benignant of pushing [for] maturation — portion the planetary system benignant of slows down."

In its yearly economic survey released Tuesday, the concern ministry said it expects the system to turn 6.5% successful the fiscal twelvemonth from April 2023 done to March 2024.

That's compared 7% maturation estimated for the existent fiscal twelvemonth which ends successful March this year.

Analysts expect the authorities to absorption connected continued fiscal consolidation for this year's budget, contempt challenges.

"The government's promised fiscal consolidation way volition necessitate a Herculean effort implicit the adjacent fewer years," HSBC economist Pranjul Bhandari said successful a caller note, adding that cutting fund deficits would beryllium indispensable for controlling inflation.

"The fiscal shortage is apt to autumn from a budgeted 6.4% successful FY23 to 5.8% successful FY24; but marketplace borrowings could stay elevated," she added. "A antagonistic fiscal impulse volition apt assistance incorporate ostentation and outer deficits, aiding macro stableness successful uncertain times."

The Reserve Bank of India's projection of 6.8% ostentation for 2023 was supra the precocious people bounds of 6%, according to the economic survey.

"While India's retail ostentation complaint peaked astatine 7.8 per cent successful April 2022, supra the RBI's precocious tolerance bounds of 6 per cent, the overshoot of ostentation supra the precocious extremity of the people scope successful India was nevertheless 1 of the lowest successful the world," the study said.

Investors volition besides beryllium keenly watching however overmuch borrowing is done by the authorities this year, Rakshit said.

"Expectations are betwixt 15 to 16 trillion rupees. Anything beyond that volition beryllium seen negatively," successful presumption of borrowing, helium noted.

Government incentives, similar taxation alleviation for radical successful the little and mediate income segments of the population, volition beryllium different large origin successful the budget, said analysts.

"This is the past afloat twelvemonth fund for the authorities earlier wide elections 2024. It besides coincides with 8 large authorities elections for 2023," Devang Mehta, head of equity advisory at Centrum Wealth, told CNBC's "Streets Signs Asia." 

"So the authorities volition besides privation to guarantee that there's wealth successful the hands of consumers earlier authorities goes successful for the large predetermination calendar. We are hoping for immoderate alleviation giveaways to the mediate people and little income bottommost pyramid population."