Budget 2018: With the Union Budget 2018 just round the corner, and the equity indices Sensex and Nifty at all-time high levels, top mutual fund managers say that the Budget will play a very important role in determining the future course of markets. “I think the Budget does play a role because it guides us on what government expenditure will be and as Latha pointed out, the economy is on a recovery path, so any acceleration in spending will give a further boost. So that is what the market will primarily look at, what is the government’s expenditure growth for FY19,” Ridham Desai, MD Morgan Stanley India told in an interview to CNBC TV18.
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Sharing his thought on the expectation from the upcoming Union Budget 2018 to be presented by Finance Minister Arun Jaitley on the 1st of February, Sajjid Chinoy, Chief India Economist, JP Morgan told CNBC TV18, “ To start with, we should understand that I keep saying 2017 was the year of valour. Big reforms in India, GST, bankruptcy law, bank recapitalisation. 2018 has to be a year of consolidation and the Budget has to send that signal that we have to consolidate the gains that we made last year.”
The expert noted that Finance Minister Arun Jaitley will have to focus on sectors which have borne the impact of key reforms. “There have been various constituencies that were impacted by the reforms of last year which may require some balm, agriculture, small medium enterprises, construction, you want to be mindful of that,” Sajjid Chinoy said.
Nilesh Shah of Kotak Mutual Fund said that the Finance Minister Arun Jaitley must look to augment revenue and maintain fiscal prudence. “Let me talk about the ways in which the government can raise revenue. I think it is important if government maintains fiscal prudence that differentiated India with China, with South Africa, with Brazil and our government is asset rich. My favourite topic has been bonus stripping,” Nilesh Shah told in an interview to CNBC TV18.
Sharing how FM Arun Jaitley could add around Rs 15,000- 30,000 crore in the upcoming Union Budget 2018, Nilesh Shah said, “There is no other country in the world where bonus shares are valued at zero. It is only in India where we give this flexibility to rich investors to avoid paying capital gains tax. You plug the loophole, you will get probably between Rs 15,000 crore and Rs 30,000 crore.”