If the Budget is populist along with high fiscal deficit expansion then it is worrisome but if the social schemes announced are within the contours of fiscal deficit then it may not be so worrisome, says Gautam Chhaochharia of UBS Securities.
Neelkanth Mishra of Credit Suisse and Gautam Chhaochharia of UBS Securities.
Mishra thinks it will be a non-event as it has been in the prior years and it is just an arithmetic exercise and too much important is given to the event. The two takeaways for the market would be the spike seen in bond yields and the fact that people are ascribing that there could be meaningful fiscal slippage but these concerns are exaggerated. He thinks people are reading too much into the political compulsions and how that would translate into policy and the rise in bond yields is unjustified.
Moreover, the view that rural income growth is weak and the government will support that through the Budget but given the limited capability of the government infrastructure to deliver something like that quickly, it may not happen.
Chhaochharia says if the Budget is populist along with high fiscal deficit expansion then it is worrisome but if the social schemes announced are within the contours of fiscal deficit then it may not be so worrisome.
Interesting to watch out social schemes that will be announced.
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