Uday Kotak, executive VC & MD, Kotak Mahindra Bank, talking to CNBC TV18, feels the FM has rolled out a very responsible Budget, with the intention of controlling fiscal deficit, combined with a great focus on the financial markets.
Here are edited excerpts from the interview
Q: How are you feeling about the markets giving the Budget a modest thumbs-down? Did you get those big ideas that you were looking for to re-stroke the investment cycle and spur on growth which today might be slipping below 5 percent for the quarter?
A: It is a very responsible Budget. On the big picture, he is controlling fiscal deficit as he has promised at 5.2 percent, and budgeting for 4.8 percent. So, a finance minister who lives up to his promise is always a good thing.
Moving on to specifics, after a long time I am finding a very high focus on financial markets is coming through in this Budget. This Budget is therefore good for capital markets, mutual funds and insurance companies. There is a significant focus and rationalisation of many things for these sectors.
In addition, to that you are getting allowance for investment, you are getting significant spend which will help rural demand, you got something for mass housing, for small investments in housing up to Rs 25 lakh. It is a good Budget
Q: Bond yields, we were talking before the Budget, have gone up from 7.79 to 7.86 percent. What is the bond yield telling you today about the fiscal deficit roadmap that he has put out?
A: We need to wait for the government borrowing programme, which number was not there in his speech. That will be a very critical number for the bond markets to react to. So, at least I don’t have that number right now and I will wait for it before passing a judgment on how bond markets move.
My view is the markets are smart, and investors are looking for long-term stability, sustainability and responsibility. The time for short-term investors and steroids is over. We need to think medium-term and from that point of view I like this Budget quite a lot.