Manish Bhandari, managing partner and CEO, Vallum Capital Advisors
We expect the budget to be a non-event for the markets. Every major policy decision that is getting implemented is outside the budget: policy decisions on roads are being taken outside the budget, Make in India is outside the budget, Smart Cities is also outside the budget. The government is also talking about reviving the SEZ policy. Again, this will also be outside the purview of the budget. The biggest announcement would have been the goods and services tax, but that is also not going to be part of the budgetary discourse. Tax simplification has already been done. Last year, the finance minister laid out a roadmap to simplify corporate taxation structures, promising that corporate tax would be cut by 25%. So, there is nothing that the markets could look forward to except for a few things in terms of Customs or excise duties. The budget document is largely going to be a statement of revenue and expenditure. I don’t think this budget will have enough arsenal to trigger a rally.
Dhananjay Sinha, head of research, Emkay Global Financial Services
The markets are expecting the government to support demand through higher public spending. The finance minister has already said that the government is committed to it and chief economic advisor Arvind Subramanian has prescribed a similar solution. The other aspect of the budget will be how the government will manage its finances. This year, it had the advantage of lower subsidies but did not pass it on to customers and instead increased tax rates. So, it gained from both higher tax collection and lower subsidies. Next year, if it needs to support the demand side, then this revenue buoyancy is unlikely. Thus, there will be higher reliance on non-tax revenue, dividend payouts by PSUs, disinvestments and spectrum auctions. The government will also try to take measures to encourage external flows from FDI. Largely, the markets will be looking forward to public spending to revive demand as corporate earnings continue to struggle, and we don’t expect the budget to disappoint on that front.