* NSE closes 0.25% up, BSE 0.17% higher
* Nifty PSU bank index closes 1.28% up
BENGALURU, July 4 (Reuters) - Indian shares closed higher on Thursday, a day before the federal budget that is expected to cut taxes on business and raise spending to breathe some life into a stagnating economy.
Earlier in the day, India’s government forecast economic growth could get back up to 7% this year, but cautioned it will face challenges keeping its fiscal deficit in check.
The broader NSE index closed 0.25% higher at 11,946.75, while the benchmark BSE index settled 0.17% firmer at 39,908.06.
The Nifty PSU bank index, which tracks India’s state-owned lenders, finished the session 1.28% higher.
For the midday report, see (Reporting by Chandini Monnappa in Bengaluru; editing by Gopakumar Warrier)