P. Chidambaram’s budget speech is expected to focus on the UPA government’s 10-years’ performance and its vision if re-elected.

Finance Minister P. Chidambaram will present in Parliament on Monday the final budget for the UPA government’s second term. The budget speech is expected to focus on the government’s 10-years’ performance and its vision if re-elected.

While voters will look for election-year sops in the budget speech, global ratings agencies will be watching Mr. Chidambaram’s performance on the fiscal deficit, or the excess of the government’s spending over its income. And it’s impact on the government’s borrowings projections.

If the Finance Minister pegs next year’s fiscal deficit target to the Kelkar Committee’s recommendation of 4.5 percent, Monday’s budget could project a big increase in government borrowings. To stay closer to the Kelkar fiscal roadmap the government will likely present a fiscal deficit of 4.5 percent in F2014-15, which translates into a 17 per cent jump in gross borrowings at Rs. 6,70,000 crore, former Finance Ministry constultant and Citi India Economist Rohini Malkani has said in a report.

The gross borrowing could drop to Rs. 6,15,800 crore if the government achieves its 4.8 percent red line for 2013-14 and pegs next year’s fiscal deficit to 4 percent of GDP, the report also said.

The figures and policies could, however, change post elections in the final budget. In 2009, the UPA government increased its interim budget fiscal deficit target of 5.5 percent of the GDP to 6.8 percent on being voted back to power as per its election manifesto promise of higher social spending. This has pushed up borrowings by Rs. 90,000 crore.

Post-2004 elections, however, Mr. Chidambaram, also the Finance Minister at the time, had left largely untouched the fiscal deficit projections and borrowings estimates of the NDA government’s interim budget.

In election years, the ruling party presents an interim budget, which is revised after the new government takes power. The Finance Minister seeks a ‘vote-on-account’ from the parliament to enable the government to meet its expenditure needs for the first four months of the new fiscal year, versus only two months in a non-election year.

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