Budget 2017: how the note ban will play on jaitley’s mind big time

Jaitley’s team forecasts a recovery in nominal GDP growth, the key driver of tax revenues, to around 12 percent in 2017-18. Yet that assumes oil prices of $55-60 per barrel and a

long-delayed GST being implemented in July. And the economy is still getting over the demonetisation. The International Monetary Fund (IMF) has chopped a percentage point off India's

forecast of real economic growth to 6.6 percent in the current fiscal year to March, meaning China regains the crown as the world's fastest-growing large economy. The Washington-based

IMF has also shaved 0.4 of a percentage point off its forecast for the coming fiscal year. HOW WILL GROWTH BOUNCE BACK? Finance ministry officials remain tight-lipped about how quickly they

expect growth to bounce back after it slowed following so-called demonetisation. International prices for crude oil, India's most expensive import item, could meanwhile overshoot the

finance ministry's expectations as exporting nations curb output, hurting the growth and revenue outlook. Modi faces the imminent verdict of voters in five regional elections, most

importantly in Uttar Pradesh. A setback there for the Bharatiya Janata Party could harm his chances of winning a second term in 2019. Election authorities have barred the government from

offering targeted Budget 'sops' to buy votes. And even if the government does ramp up public investment in Jaitley's fourth Budget, it has little room for manoeuvre – nearly

nine in every Rs 10 it spends go on servicing debt or paying wages and subsidies. "It will not be a populist, but a pragmatic Budget," said a senior finance ministry official with

direct knowledge of Budget planning. _(Published in an arrangement with Reuters)_