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Below the pre-budget expectations report from YES Securities

FY25 Union Budget: Consolidation the mantra

* The Interim Union Budget is unlikely to see any big-bang announcements.

* However, policy intent is likely to be made clear through the selective allocation of resources and thrust towards rural development, employment generation and capacity building through infrastructure development

* The critical intent of this Budget will be to signal a consolidation towards achieving the promised 4.5% GFD/GDP by FY26. Thus, the

* government will have to do a tightrope walk in allocating resources for capital expenditure, the incremental pace of which can reduce. Support to economy through capex push to continue, though growth in capex expenditure will be more sober at 12-13%; direct consumption boosting measures unlikely

* With help from tax collections on the back of higher nominal GDP growth in FY25 compared to FY24, we expect GFD/GDP to print at 5.4% for FY25BE (after 5.8% for FY24E). 10-year yields can stay northwards of 7% in H1FY25 as we think that the RBI will have to conduct OMO sales to prevent its balance sheet size from increasing sharply. Dips below 7% will be conditioned by rate cuts by the RBI

* FY25BE gross and net borrowings seen respectively at INR15tn and INR11.7tn; comfort to come from JPM Bond Index inclusion related flows

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