With economic recovery stories in the air, the budget will disappoint investors if it does not show strong intent of deficit-slashing.

Overseas investment, which is desperately needed in funding infrastructure, is scared if a country has huge fiscal deficit. India should distance itself from aggressive deficit spending that that dooms the country from this all important overseas investment. Being well positioned in the current scenario if the budget does not aggressively slash deficit it is sure to affect the sentiments of the market. Besides, market sentiments it would also mean that the funding costs would rise and will crowd India's private borrowing.

Finance Minister, Pranab Mukherjee has hinted of accelerated growth. Improved tax receipts and the sale of government assets have given enough new revenue to avoid the cuts in spending and still allow him to lower the fiscal deficit.

Expert analysts had polled a forecast of 5.6 percent, as India fiscal deficit as a percent of GDP. The Indian government has stated that it would target about 5.5 percent.