Union Budget 2017-18: Corporate tax cuts, higher bank recap eyed, say experts

The Budget for 2017-18 should look to boost consumption, says Manishi Raychaudhuri, Asian Equity Strategist, Equity Cash Asia Pacific, BNP Paribas. Readjusting income tax rates or brackets will provide incentives to investment and consumption, he notes.

Raychaudhuri believes while the FRBM may not be tinkered around much there could be slight relaxation on the deficit target. He expects affordable housing and rural infrastructure to be focus areas as it can boost for lower and middle income and translate into consumption. "They (government) can’t throw caution to the wind and tinker around the FRBM-mandated fiscal deficit target much. Fiscal deficit target could be slightly relaxed but not very much," he says.

Chetan Ahya, Co-Head Of Global Economics & Chief Asia Economist, Morgan Stanley expects fiscal deficit target to be kept around 3.3 percent considering there is not much revenue support from excise on oil this time around.

Ahya believes bank recapitalisation of another Rs 25,000 crore (similar to last year’s Budget) compared to targeted Rs 10,000 crore for the year will help lift sentiment for the sector.