Jaitley’s fiscal largesse will not only boost consumer spending, but may also shore up the fortunes of Modi’s Bharatiya Janata Party (BJP) in five regional elections for which voting begins on Saturday. The electoral outcome, particularly in the battleground state of Uttar Pradesh that is home to one in every six Indians, would play a big part in determining whether Modi can win a second term in 2019.
Busting the deficit target, however, would worry ratings agencies at a time when oil prices—India’s most costly import—are on an upswing. Standard & Poor’s has already warned that, at 68.5%, India’s public debt-to-GDP ratio is still too high.
