Market Outlook
Investors India|March 2020
Market Outlook
Shreyash Devalkar
Market Outlook

1. What did you make of the Budget 2020? What according to you qualifies as a ‘good, bad and ugly’ from Budget 2020?

The budget announced has been measured in the context of a tough economic environment. With an eye on the broad economy, the budget speech addressed a cross section of issues aimed at the long-term economic recovery. First signs indicate that the budget is an incremental budget that looks to steady the economy and does not structurally change our positioning in debt or equities.

The limited fiscal slippage adopted by the government (as opposed to certain demands for a big stimulus) aims to balance growth concerns without affecting market and debt obligations. The key takeaway here is that the budget was largely a nonevent and investors should look to go back to investing roots and focus on the steady improvement in the economy likely over the next couple of years.

The budget did not deliver on key market asks for equity markets around reduction in LTCG rates or groundbreaking growth stimulus. However, the government also maintained fiscal prudence by refraining from increasing borrowing limits for the current year and marginally increasing borrowing targets for the next year in line with market expectations.

An important point to note is that the government has aimed at simplifying the taxation process to simplify tax filings for corporates. On the personal taxation front, the optional tax slabs for those individuals not claiming deduction benefits is likely to spur consumer demand from low income groups.

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