Goldman Sachs has said the coming Union Budget would be keenly watched as a test of the government's commitment to fiscal responsibility.
The Budget will be keenly watched (to see) whether there is a credible plan for reducing the fiscal deficit and whether populist measures can be avoided before the 2014 general elections,” the Wall Street firm said in a note.
From a stock market perspective, the report also says the Budget could be positive for banks, capital goods and logistics, but negative for consumer goods.
It further said while Finance Minister P Chidambaram was likely to announce a deficit target of 4.8 per cent for FY14, the credibility on how to achieve this target will be the key.
Chidambaram has already cut planned expenditure by up to 10 per cent and said he would bring the fiscal deficit down to 5.3 per cent this financial year.