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Investors may cut India slack on deficit target, if budget is credible

But want govt spending to be diverted to vital sectors such as infrastructure

Reuters  |  Mumbai 

Indian bond yields may not spike if the government opts to increase spending when it unveils its annual budget in late February, so long as the deficit target is widened to no more than around 4% and fiscal consolidation steps are taken. Some government economic advisers have recommended Finance Minister Arun Jaitley should row back on a fiscal deficit reduction plan that would aim to bring the deficit down to an eight-year low of 3.6% of GDP in the fiscal year starting in April. They argue that the government's capital spending should be increased to help the economy break ...

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First Published: Tue, January 13 2015. 15:35 IST