Prime Minister Narendra Modi’s loss of control of Karnataka will put pressure on his party to ramp up spending to woo more rural voters, pushing back plans to rein in one of Asia’s largest budget deficits.
The budget was already under strain even before this weekend’s events in Karnataka — the southern state where the BJP failed to form a government. The fiscal target was breached in the 2018 financial year, while the goal for this year was widened to 3.3 percent of gross domestic product.
Add to that a surge in oil prices, the currency’s more than 6 percent slump against the dollar this year, and a pick-up in inflation, and India’s outlook is starting to look gloomy. Read More
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