Budget Day: Chidambaram faces moment of truth
need of the hour, and ratings agencies will sift through the finer budget details to judge India's sovereign credit rating, which already has a negative outlook at two ratings agencies," investment bank Nomura said.
When Chidambaram stands up in parliament at 11 a.m. IST to lay out the government's spending and fund-raising priorities for the coming year, he will effectively start the countdown to an election due by May 2014.
Despite the emphasis on fiscal prudence, there will likely be some populist measures that will be key elements in the Congress's campaign.
He is expected to highlight plans to expand the supply for cheap grain for the poor at a total cost of more than $22 billion to the Treasury, and an ambitious direct cash transfer programme for delivering social welfare payments and subsidies.
CREDIBILITY AT STAKE
Chidambaram has staked his reputation on hitting a fiscal deficit target of 5.3 percent of GDP this year and 4.8 percent in 2013/14. A no-nonsense, Harvard-educated, lawyer who commands both respect and fear in government, he has squelched opposition from cabinet colleagues worried that spending cuts could ignite a backlash among voters.
Some ministries are bracing for funding cuts of up to 20-24 percent from their original 2012/13 targets.
Defence Ministry officials fear the cuts could force a delay in weapons purchases by a country that has become the world's largest arms importer in recent years.
"My sense is that (at) this point the critical action we have to take is to try and re-accelerate growth, which is difficult in a
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