Capital Economics Emerging Markets Economist Shilan Shah says investors want to see India cut subsidies

SHOWS: LONDON, ENGLAND, UK (FEBRUARY 12, 2015) (REUTERS - ACCESS ALL)

1. CAPITAL ECONOMICS, EMERGING MARKETS ECONOMIST, SHILAN SHAH, SAYING:

JOURNALIST ASKING SHILAN SHAH: 'All hopes are pinned on what the government does in the upcoming budget. What are your expectations?'

SHAH: 'Well I think we are cautiously optimistic that the finance ministry can deliver a budget which is regarded well by investors. I think the finance ministry is going to continue on its path of consolidating, tightening fiscal policy, potentially in the region of around, bringing the deficit down to about 3.8 percent of GDP in the next fiscal year from about 4.1 percent this year. Now within that I think there is some important developments that people will be looking out for. One obviously the finance ministry has benefitted greatly from the fall in oil prices and so I guess investors will be hoping for a scaling back of subsidies which is easier now than it has been in the past. I guess one step that might be a bit too far for the government would be cuts to public sector wages. That might be a bit too ambitious, we think there doesn't seem to be much political will behind that. So we are not particularly hopeful of changes in that area and then beyond the next fiscal year obviously we are looking for a bit more clarity on the goods and services tax and how the central government aims to compensate the state governments. And if there is some clarity on that, which we are hopeful of, then that should certainly go down well in markets as well given the potential benefits of the implementation of the goods and services tax.'