Sources confirm that prioritized infrastructure projects could be favoured by the government.

India is likely to spend more next fiscal year than this year's budgeted $415 billion and prioritise infrastructure projects, relying on asset sales of around $40 billion for some of the funding.

After largely keeping its purse strings in check as the coronavirus pandemic choked businesses and threw millions out of jobs, Prime Minister Narendra Modi's government is keen to bring the economy back onto a solid growth path with the budget to be presented on Feb. 1.

Actual spending in the current fiscal year ending March 31 could be lower than the original target of 30.4 trillion rupees, but will be higher than last year's 26.86 trillion rupees, one of the sources said.

"Supporting growth (and) infrastructure spending is the priority now, not fiscal-deficit math," said one of the sources.

"But it is not that the spending will suddenly increase from 30 to 35 trillion rupees (when) our revenues are falling. The only ways to generate funds are through asset sales and borrowing."