Rural employment programs and employment generation schemes will receive a higher share of attention and allocation. Apart from these schemes, affordable housing and infrastructure related schemes should also hog the limelight.
Q: What are your expectations from the Modi 2.0 Budget?
A: Going by the social philosophy of the current government, the Budget is expected to be pro-poor and growth and employment-oriented.
Rural employment programs and employment generation schemes will receive a higher share of attention and allocation. Apart from these, affordable housing and infrastructure related schemes should also hog the limelight.
Q: Will the government retain fiscal deficit target at 3.4 percent of GDP for FY20?
A: There is no way the fiscal deficit number can be enhanced to a higher percentage of the GDP. Though such absolute figures are unimportant, what is important is the fiscal glide path that the government sets for itself, and how it follows that path.
Above the act of restricting the fiscal deficit, the intent and commitment to do so are meaningful. This is what the markets would also appreciate.
Q: Will there be financial sector reforms such as privatisation of PSU banks, capital infusion, etc. in the upcoming Budget?
A: There will be proposals for banks as their capital base has eroded and they need the infusion. In the face of high NPAs and the losses they have booked over the years only a substantial re-capitalisation program will be able to provide them with the strength required to do fresh business.
The banks may also be advised to explore capital markets route for their needs, which would link their ability to raise money to efficiency in management.
Regarding privatisation and mergers, I do not think it is likely to be in the Budget, because those aspects of bank revitalisation can be worked out even outside of the Budget and need not be part of the Finance Bill.
Q: Will the Government provide investment stimulus in Budget 2019 to boost growth?
A: The government proposals are likely to be into employment generation schemes or programs, as well as income enhancement schemes. It assumes importance in the wake of the rising unemployment numbers and the agrarian distress that seems to be quite widespread.
The government needs to work on increasing output employment and growth. This will automatically convert itself into demand and production.
What the neo-classical and Keynesian economists have highlighted is exactly what we need to work on for the fruits that we desire.
A major push which the government can give is to the housing sector. An aggressive thrust on affordable housing and making the existent scheme more user-friendly is something the government can achieve in the Budget.
This along with the proposals for infra spends on roads and ports etc.. will give a boost to other related sectors such as cement, steel, energy, retail, and transport. I look forward to concrete proposals in this area.
It has another significance, as the decisions are closely related to the poor and the marginalised and they are the ones who need a roof over their heads. Provision of good sanitation and drinking water as also electricity would require a house to be in place first. The government understands this and will respond appropriately.
Q: Amid the recent fall we have seen in markets – where are the pockets of opportunities? Where is the smart money moving?
A: It is true that so many scrips have moved down to their 52-week lows and that they are looking cheaper to buy. But, the point is that they need not necessarily buy the ones which are going to go up. This is because the broader market will start moving up with better earnings being realised over a period of time.
Therefore, we need to be careful as to what we pick up for the portfolio. As far as sectors go, banking, the larger and better NBFCs, and infra are the themes that could do well apart from technology.
Q: What are your expectations from the June quarter numbers from India Inc.?
A: There may not be any significant variations in the earnings numbers from the last quarter mainly due to the distressing conditions which have prevailed in the economy in many major sectors in the last two to three quarters or more. Improvements may happen only over Q2 of FY20.