The government plans record levels of borrowing next year and will count on surging economic growth to help cut its fiscal deficit, putting pressure on the Reserve Bank of India (RBI) to be more aggressive in its monetary tightening.

Finance Minister Pranab Mukherjee told parliament of India, the government plans to increase market borrowing by 1.3 percent in his $239 billion budget, pushing bond prices lower as investors anticipated a flood of fresh debt supply.

It is believed that the borrowing plan cements the likelihood that the RBI will raise interest rates at its next meeting on April 20 as policymakers scramble to keep surging food inflation from spreading to the wider economy and fueling social unrest.

It is also believed that Given that the fiscal stimulus withdrawal was not strong, the Reserve Bank of India (RBI) may have to be more aggressive in its policy tightening.

Many watchers praised the plan to reduce the fiscal deficit to 5.5 percent of GDP in the new year from 6.9 percent this year, with further declines in coming years, and a RBI deputy governor said the budget addressed concerns on fiscal discipline.

Mukherjee announced plans to hike spending on social and agricultural programmes popular among voters, and adjusted taxes to put more money in the hands of the middle class. so would that mean are we gonna get rich this year?

But some analysts said India had missed a chance to take more aggressive fiscal measures as Asia's third-largest economy gathers speed, reinforcing perceptions that the coalition government may not have the heart to make tough decisions.

The budget focused on keeping the economic recovery robust, but there was little mention of reforms, such as freeing state fuel and food subsidies, that investors say could help India rival China's years of double-digit growth rates.

SPENDING AND REVENUE
Total government spending will rise nearly 9 percent in the next fiscal year, while revenues will rise nearly 18 percent as the economy recovers.

In one politically charged effort to raise revenue, the government said it would raise prices of gasoline and diesel fuel for the first time in 7 months.

Mukherjee also pencilled in expected revenue of 400 billion rupees from the sale of stakes in government companies, a figure that some observers said was ambitious.

India's economy grew 6 percent in the December quarter, short of a Reuters poll forecast of 6.8 percent, as farm output fell 2.8 percent after a poor summer drought.

The slowdown in spending growth may help ease inflation but, High food prices helped push wholesale price inflation to 8.56 percent in January.

Opposition lawmakers boycotted much of the budget session, saying government plans to increase fuel prices would further add to the woes of millions of Indians hit by high prices.
The yield on benchmark 10-year government bond fell as much as 6 basis points earlier on Friday but erased that move on worries over high government borrowing. The yield on the benchmark 10-year government bond ended at 7.86 percent, three basis points higher than Thursday's close.

Stocks ended 1 percent higher after Mukhjeree announced measures aimed at increasing domestic consumption.

And for all my friends who don’t understand finance here is what the whole budget means:
Some things went up..
Some things went down…
Some things stayed the same…
Ruling party loves budget…
Opposition hates budget…
Some parties have threatened to take to the streets..

It’s mostly the same year after year !