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Stimulus 2.0 good for markets in long run, hitches in short term: Experts

Markets may be disappointed in the short term, as not sufficient steps have been take to revive demand

Topics
Coronavirus | Stimulus package | Lockdown

Sundar Sethuraman & Ram Prasad Sahu 

msmes, gst
The worry now is more on how do we revive the economy in the short term, says expert

The Centre has announced several measures to cushion the poor, and rolled out structural reforms that are a long-term positive, say experts. But, the markets may be disappointed in the short term, as not sufficient steps have been take to revive demand.

Jyotivardhan Jaipuria, Founder, Valentis Advisors

Markets will be disappointed in the short term as there is not much to stimulate the demand. A lot of these measures are good in the long term. The worry now is more on how do we revive the economy in the short term. And, that has been the missing element in this package. The market would have preferred some more fiscal spending from the Centre. The extra borrowing cushion given to the states is a good measure

Andrew Holland, CEO, Avendus Capital Alternate Strategies

The extra allocation for MNREGS will be helpful for migrants. And worries about the fiscal deficit and downgrade by sovereign rating agencies have been allayed. The increase in borrowing for states is good news, and one has to see if there is adequate demand for bond issues that will come. However, the markets will be a bit disappointed as the package is short on measures that will revive demand in the short term


S Naren, Executive director and CIO, ICICI Prudential AMC

The package has met the immediate objective of giving money to the poor while rolling out long term reforms. The package will ensure downside risks are lower. But the package would be deemed to be complete only when you see much lower interest rates. The transmission of liquidity to smaller borrowers is a must. These are in the domain of the monetary policy, and I am assuming will happen over the next few weeks

Navneet Munot, Executive director and CIO, SBI Mutual Fund

Incremental expenditure on MNREGS is the best thing to do as it achieves two objectives: Immediate cash in the hands of people will boost consumption and at the same time create capital assets. The steps letting states to borrow more based on certain criteria are positive. To compete against the likes of China we need cooperative federalism, and GST council is a great example of this

UR Bhat, director, Dalton Capital India

Markets might react negatively. But, market expectations are always selfish in nature. Their demands will still be in the line of the scrapping of LTCG (long-term capital gains) and STT (securities transaction tax). Such measures are irrelevant in the current context. The government has given relief to the affected parties using the institutional mechanism. And, they have used the current crisis as an opportunity to deregulate many industries

First Published: Mon, May 18 2020. 02:39 IST
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