Leg-up for financial savings: Nilesh Shah

The Budget is more realistic than optimistic in its projection, enhancing its credibility. The debt market will view the Budget positively as the revenue deficit at 2.8 per cent of GDP and net borrowing at Rs 4.56 lakh-crore met expectations. Mandating the Reserve Bank of India to target inflation is a game changer.

The economy will benefit from rollout of Goods and Services Tax, deferment of the General Anti-Avoidance Rule and higher tax resource allocation to states.

Investments will be spurred by the plug and play approach to ultra mega power projects, the multiplier effect of the National Infrastructure Fund, a reduced inverted duty structure, additional allocation to roads and refinancing for microfinanciers.

Encouragement of financial savings through monetisation of gold and pension contributions, and severe punishment for black money, will lead to more investments. The bankruptcy code will help contain non-performing assets. There will be corporate earnings growth in the next eight quarters, mostly if there is higher capacity utilisation, lower commodity prices, an improved working-capital cycle and lower interest and tax rates. Investors can then hope to enjoy a bull run in the medium term, albeit subject to volatility due to global event risks.

Nilesh Shah
CEO, Kotak Mutual Fund