New Delhi, Feb 2 : The reaction of the foreign portfolio investors (FPIs) and international rating agencies to the fiscal deficit estimates will be keenly watched. The increase in absolute fiscal deficit from Rs 9.33 lakh crore in FY20 to Rs 15.06 lakh crore in FY22 could lead to demand push inflation if the supply side constraints are not addressed, as per a report by the HDFC Securities. This could lead to gradually rising interest rates. "However, given the fact that most economies are undergoing similar expansionary phase due to Covid-19, these agencies may not be harsh on India immediately", HDFC Securities said. Also the government's approach of being consistent and sustainable with its fiscal response, will serve to better instead of worsen offshore perception of local Indian assets. The report noted that the Budget, as usual, relies on disinvestment and asset monetization for resources. "This has always been an area of concern since actual receipts have almost always fallen short of targets. The government, for example, now has a policy of selling all PSUs in non-strategic sectors and keeping the number of PSUs in four strategic sectors to a bare minimum," the report said. It noted that Finance Minister Nirmala Sitharaman seems confident that the four PSUs including Air India and BPCL that were scheduled for strategic sale this year will finally be sold off next year. Also the IPO for LIC and a Special Purpose Vehicle to sell surplus land finds place in the budget speech. "Also the use of the word "Privatisation" in the Budget speech vs "Divestment" hitherto signals government's seriousness in going for strategic sales", the report said. A National Monetization pipeline has been set up to sell a variety of existing infra-assets (Dedicated Freight corridor, Airports, Roads/Highways, Pipelines, Transmission assets, etc) to fund the creation of new assets. It remains to be seen how effectively these new structures can improve the risk appetite for infra projects, the report said. /IANS