The government is likely to face persistent revenue pressures throughout the year, said Sanjay Mookim, director - India Equity Strategy at BofAML, adding that "this budget is only a starting point."
Finance minister Nirmala Sitharaman delivered a growth-supportive Budget, opening the liquidity tap for India Inc through a giant capitalisation of banks, and by making money cheaper for India Inc by sticking to fiscal discipline. However, the equity market verdict was negative with investors sulking that there will be more share supply thanks to the proposal to force companies to list a minimum of 35 percent of their shares versus the 25 percent currently.
There was also some distress over the rise in taxes for the super-rich. However, the bond markets rejoiced as the market borrowing number remained unchanged and part of the borrowing has been proposed to be borrowed from abroad.
“This budget is only a starting point to my mind and I still see persistent revenue pressures for the government through the rest of the year... getting 25 percent revenue growth in a gross domestic product (GDP) with 11 percent nominal GDP growth is very tough. So from a government perspective, we are actually likely to still see capex cuts or let us say spending cuts through the rest of the year as they kind of keep in pace with the fiscal deficit targets. I think strongly that the government will not pass that 3.3-3.4 percent GDP target," said Mookim in an interview with CNBC-TV18.
Mookim, along with Ashwini Agarwal, co-founder and partner at Ashmore Invst Management and Jayesh Mehta, MD & Country Treasurer at Bank of America, discussed with CNBC-TV18's Latha Venkatesh how the Budget 2019 is likely to impact the market and economy.