Budget Analysis: FM has done more good than bad: Vallabh Bhanshali

Vallabh Bhanshali, Chairman, Enam Securities Pvt Ltd reacting on the Budget says the FM has done more good than bad. One is boost to investment climate and two, initiatives like the two new corridors. However, he did not speak on how the current account deficit will be dealt which is a disappointment.

Below is the verbatim transcript of his interview on CNBC-TV18 Q: It is a workmen-like Budget. But would the market have expected more from P Chidambaram? A: Finance Minister (FM) on the whole has done more good than bad. There are three or four things that we were looking for. One was boost to investment climate, under the circumstances he has increased public expenditure and has provided a fuel for the private sector to come forward. Some of the initiatives like the two new corridors out of the seven proposed are very good steps. The big disappointment is not spelling out how the current account deficit (CAD) will be dealt with. Partly, he has said the commerce minister with deal with. Secondly, he said that as far as gold disincentivising is concerned he is still working out a scheme. I think is a very big area of concern for everyone. Thirdly, the boost in the inflation that will come from all the large expenditures is a big worry and if that doesn’t change, the interest rate reduction from Reserve Bank of India (RBI) cannot be expected. Q: From a stock market point of view what have we got, small tinkering in the Securities Transaction Tax (STT), no major change in the Rajiv Gandhi Scheme, which will galvanise equity participation. A commodities transaction tax (CTT), which has come in – is there a big deal for the capital market in this Budget? A: Not apparently, but if you look at the sentiment, the big fear in the sentiment was what will happen on the food security? Will this be a highly populist Budget? I think some of those fears have been allayed big time. Therefore it has reduced to governance, and it has been reduced to investment cycle kicking up. The investment cycle will come back with the big issue which he himself identified as governance. So if tomorrow onwards we have to live day-to-day. How does this government perform on that account, which has been its big failure? Second will be international cues, which I think over the next six months will be quite mixed. I think if we have a good monsoon, we will get back to growth much better than people expect.