Falling oil prices to pull India's budget out of deficit trap

New Delhi

FALLING oil prices have been a major windfall for India: Just weeks ago it faced the prospects of failing to meet fiscal deficit targets, but can now expect a budget that not only hits its targets, but also provides extra cash to support reform.

The coming budget for fiscal 2015/16 (April-March), which will be unveiled on Feb 28, is widely seen as a test of Prime Minister Narendra Modi's ability to lead economic reform.

Fortunately for Mr Modi, the economic climate has handed him a chance to pass that test with flying colours: Budget planners are optimistic that he will set Asia's third-largest economy on a…