India's businesses, already facing high interest rates and a global economic slowdown, worry that the finance ministry will ask them to shoulder a bigger tax burden in the budget set for release on Friday to trim the fiscal deficit.

After a drubbing in recent state elections, the government has little room to cut subsidies costing 2.5 per cent of GDP. But without fiscal consolidation, the Reserve Bank of India will have a harder time lowering interest rates without stoking inflation.