Budget 2016 expectations: Lift gloom enveloping private sector investment cycle

New Delhi | Published: February 26, 2016 4:05:24 PM

Budget 2016 expectations: The Finance Minister (FM) has an unenviable task of surmounting multiple global & domestic headwinds that are holding back India’s economy and present a Budget that will lift a miasma of gloom enveloping private sector investment cycle, exports de-growing for over a year and a severely capital-starved banking system groaning under asphyxiating burden of stressed assets...

Budget 2016 expectations: The Finance Minister (FM) has an unenviable task of surmounting multiple global & domestic headwinds that are holding back India’s economy  and present a Budget that will lift a miasma of gloom enveloping private sector investment cycle, exports de-growing for over a year and a severely capital-starved banking system groaning under asphyxiating burden of stressed assets.

Despite a recalcitrant Opposition hobbling swift passage of key economic reforms in the Upper House, limited fiscal maneuver in view of sharply lower nominal GDP growth, ballooning of expenses in the wake of VII Pay Commission & OROP recommendations; the FM will have to stay focused on medium-term fiscal consolidation to anchor inflationary expectations to help RBI maintain its accommodative stance on interest rates.

Significant allocations to revive investment demand through public investments in roads, railways, farm infrastructure; democratizing equity culture among retail investors by providing aggressive tax incentives and providing a booster shot to consumption-led growth through a cash-for-clunkers scheme for auto sector as well as significantly enhancing tax incentives for housing sector will act as force multipliers for downstream sectors.
By Ajay Bodke, CEO & Chief Portfolio Manager – PMS, Prabhudas Lilladher Pvt Ltd

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