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Last Updated : Jan 18, 2020 09:13 AM IST | Source: Moneycontrol.com

Budget 2020: Government unlikely to meet fiscal deficit target; 50-75 bps slippage possible

Given that elections are behind, the Budget would focus on reforms and means to increase demand. The infrastructure sector would be one of the biggest beneficiaries, personal income tax tweaks could be on the cards to revive consumption.


Given the current tax collection run rate, meeting the fiscal deficit target seems difficult. The market has already factored in slippage of 50-75 bps, Satish Kumar, Head of Equities at Equirus Securities tells Moneycontrol’s Kshitij Anand.

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Q. What are your expectations from the upcoming Budget? Do you think it will turn out to a Budget that will count considering the fact that growth estimates are heading south?

A. Given that elections are behind, the Budget would focus on reforms and means to increase demand. The infrastructure sector would be one of the biggest beneficiaries.

With corporate tax cuts already been announced personal income tax tweaks could be on the cards to revive consumption.

Q. Do you think the government will be able to meet its fiscal deficit target? If not, what extent of slippage would the market be comfortable with?

A. Given the current tax collections run rate meeting the fiscal deficit target seems difficult. The market has already factored in slippage of 50-75 bps.

Q. Which sectors are likely to hog the limelight in Budget 2020 and why?

A. Infrastructure and Agriculture sector would be in the limelight to revive demand and boost the gross domestic product (GDP).

Various measures have already been taken to push the infrastructure sector, however, financing continues to be a big challenge and hence policies to attract long term financing would be one of the focus areas.

Railways sector could be the other sector that could be in the limelight to drive the capital goods demand. Also, healthcare could be in limelight.


Q. What are the expectations from Budget 2020 from investors or market perspective?

A. Personal Income tax rate cut; more investor-friendly policies to attract long term funds; higher deduction for companies involved in research and development (R&D); policies on the agriculture sector especially on the procurement and storage front as a lot of inefficiencies still exist in the system.


Q. Do you think infrastructure could turn out to be a strong beneficiary in the upcoming Budget?  

A. Yes, various measures for the infrastructure sector have already been taken. Roads sector has seen an uptick in awarding and other sectors will gradually follow. The power sector, especially the renewable segment, could be back in the limelight.

 

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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First Published on Jan 18, 2020 09:13 am
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