India's economy is all set for a turnaround and the government needs to unclog the financial channel to expedite growth, says Mixo Das, Asia equity strategist at JPMorgan.
In an interview with CNBC-TV18, Das shared his expectations from the Union Budget 2020. “We have been constructive on Indian equities since November last year and the main reason for that is the fact that India is ripe for a turnaround. In the macro indicators, we are already seeing that in the PMIs, cement and property demand,” he said.
Speaking further about the budget, Das said, “We need to see more demand stimulus in India and this comes at a tricky stage because India’s government finances are not particularly great. So the room for fiscal easing is limited. So how the government tries to balance these pros and cons will be interesting to see today.”
When asked about reforms, he said, “There is definitely a need for more fiscal stimulus at this point and boosting demand is going to be a self-fulfilling cycle which creates more positive effects. So given the situation that the Indian economy finds itself in, a need for more fiscal stimulus is definitely there. Therefore, I would be much more biased towards more aggressive fiscal expansion than a conservative fiscal approach.”
He further said that Indian bonds have also been weak due to fears of fiscal expansion.
“From my perspective, the fiscal easing is definitely more of a priority than fiscal consolidation in the near-term and then when you start to think about reforms, what we have seen so far is on tax cuts, there could be more on that on that front coming through the budget but from business environment perspective more needs to be done in terms of cost of land acquisition as well as mobility in labour markets,” Das added.