A key point to be raised in the budget will be the transfer of surplus from the Reserve Bank of India (RBI) even as finance minister Nirmala Sitharaman faces a tough trade-off between fiscal consolidation and a stimulus to push the economy.

According to a report from HDFC Bank, the room for significant fiscal stimulus to spur growth is constrained, considering that achieving the current (interim budget) target of 3.4 per cent of GDP could in itself be a tall order.

“The target rests on a nominal GDP growth assumption of 11.5 per cent for 2019-20. The nominal growth stood at 9.5 per cent in the fourth quarter of 2018-19. If this growth slowdown and low inflation pressures spill into the first half of this year, nominal growth could be much lower than what is being currently assumed,” its economists said in a note on the eve of Sitharaman ‘s maiden budget.

The report pointed out that the finance minister faces more constraints on the expenditure side. While the interim budget introduced various schemes and announced personal income tax rebates, the government subsequently promised an extension of its PM-Kisan scheme to all farmers, raising its cost to Rs 87,218 crore.

However, it observed that the key issue in the budget and the “proverbial joker in the pack” remains the transfer of the RBI’s surplus capital.

According to the report, the most optimistic estimates of this amount is Rs 3 trillion that would be a one-shot transfer from the central bank. Given the lack of consensus in the Bimal Jalan panel, which has been formed to decide the amount, it went for a conservative estimate and projected the amount at around Rs 0.75-Rs 1 trillion (in the baseline) which would be paid in a staggered manner rather than a one-time transfer. The Bimal Jalan committee is expected to submit its report on July 16.