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A lower-than-expected fiscal deficit target in India's budget came as a surprise, even as it was expected to be fiscal-centric, the chief economist of credit rating agency ICRA told Reuters on Friday.

"We had expected fiscal deficit at 5.3% of gross domestic product (GDP)," Aditi Nayar, also the head of research and outreach at Gurugram-based ICRA, told the Reuters Trading India Forum.

The government aims to reduce its fiscal deficit to 5.1% of GDP, down from a revised 5.8% for this financial year, and plans to borrow a gross 14.13 trillion rupees ($170.52 billion), against expectations of 15.60 trillion rupees.

The gross borrowing was surprisingly lowered as the government anticipates repaying a chunk of maturing debt through the Goods and Services Tax compensation fund, budget documents showed.

Nayar also expected the Reserve Bank of India to begin cutting rates in August or October, depending on the quantity and quality of rainfall in the country.

"If there are positive signs that the monsoon will be ample and well distributed, we could get a stance change in June, followed by a cut in August," she said.

However, if the early signs for rainfall are not favourable, the change in stance could be postponed to August, followed by a cut in October, she added.

The latest Reuters poll showed that all but one of the 60 economists surveyed expected the central bank to hold the repo rate at 6.50% at the conclusion of its Feb. 6-8 meeting.

A near two-thirds majority, comprising 41 of 60 economists, predicted that the central bank would keep the rate unchanged at least until the third quarter, in contrast to expectations of a key interest rate reduction by the U.S. Federal Reserve in the next quarter.

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($1 = 82.8625 Indian rupees)