Fiscal deficit target of 3.3% announced in Budget 2018 looks shaky: Shailendra Kumar

Shailendra Kumar,  CIO at Narnolia Securities Limited.

"Budget 2018 is a relief in the sense that it was the last regular budget ahead of next year general election and the fear was that it would be a populist budget loaded with lots of sops and other unproductive expenses. Though the narrative and the tone of the budget is populist and government is trying to win over constituencies that has suffered lately, but on an overall basis budget has not gone overboard in terms of unproductive expenses."

"There are some really good initiatives like health insurance and farm productivity measures. Also decision of imposition of long term capital gain tax has come with grand fathering clause and in that sense has avoided becoming party breaker to the ongoing rally in the stock market. But the budget misses on couple of things- raising education and health cess in GST era looks retrogressive."

"Fiscal deficit target of 3.3 percent appears shaky as some of the expenses like subsidy on account of agricultural procurement and oil could spoil the arithmetic and that’s the reason why 10 year bond yield hardened to 7.56 percent post budget announcement."