We think infrastructure and consumer sectors are likely to hog the limelight in Budget 2020 due to the impact that the Budget can potentially have on companies in these sectors, Vinay Paharia, CIO Union Asset Management Company, said in an interview with Moneycontrol’s Kshitij Anand.
What are your expectations from the upcoming Budget?
We think that this time, the Finance Minister has very few arrows in her quiver. The government has already announced changes in Corporate Taxes.
Changes in indirect taxes are out of the purview of Union Budget and are administered by the GST council. In her various press conferences post Budget 2019, the FM has announced infra projects, given clarity on taxation aspects, etc.
Thus, what remains are potential changes in the personal taxation, tweaks if any in the direct taxes and changes to allocation to various government schemes.
Hence, unless some big bang direct taxation related announcements are made, the upcoming Budget can at best be a sentiment booster.
Do you think the govt. will be able to meet its fiscal deficit target?
The fiscal math is getting tighter by the day for the government. The fall in the direct taxes due to cut in the corporate tax rate, miss in divestment targets and the miss in GST collections may make it very difficult for the government to adhere to the fiscal deficit targets. We expect a slippage in FY20 and FY21 fiscal deficit targets.
Which are the sectors that are likely to hog the limelight in this Budget 2020 and why?
We think infrastructure and consumer sectors are likely to hog the limelight in Budget 2020 due to the impact that the Budget can potentially have on companies in these sectors.
What are the expectations from Budget 2020 from investors or market perspective?
Our expectation is for the government to make announcements to boost consumer sentiment and provide an outlook on fiscal responsibility.
Do you think infrastructure could turn out to be a strong beneficiary in the upcoming Budget?
The government has reiterated its commitment to the infrastructure sector and we expect the same to be reinforced in the upcoming Budget. However, we shall be watchful of cuts in government expenditure in the sector due to weakness in revenue collections.
The govt struggled to meet the divestment target in FY20. What are the estimates you are factoring in for the next fiscal?
We think the government has to increase its divestment target, as asset sales are the only means to meet the fiscal responsibility targets in the medium term.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.