Budget 2023 will be the definitive full Budget of the Modi government before the 2024 general elections, and as such, it is receiving a lot of attention. Morgan Stanley predicts that the fiscal deficit will decrease to 5.9% of GDP in FY24 from the 6.4% estimated for FY23.

Morgan Stanley's Chief India Economist Upasana Chachra expressed views that a rate of interest greater than 6 % would be challenging for the market to absorb.

Reduce the government's budget deficit, they say. The reference point of 6.4% is already very high, so any further slippage will not be well received by the markets. Our prediction of 5.9 percent represents a steady course of consolidation. She warned that a rate of 6% or higher would be "a little negative for markets."

The gap between government revenues and expenditures is known as the fiscal deficit. Percentages of GDP are used in the calculation (GDP).