Prior to joining UTI AMC, he was overall in-charge of equity products at Sundaram Asset Management, Chennai and has also worked with Templeton Asset Management, Chennai for 10 years as senior research analyst and portfolio manager. Bhaskar shared his views on the Budget with N Sundaresha Subramanian. Excerpts:
How would you rate this budget, populist or pragmatic?
Populist. Are elections round the corner?
Do you think the market is overreacting to the farm loan waiver... How do you see the move panning out for the banking sector?
It is meant to help the cooperative banking segment, as it was reeling under bad loans and lack of capital adequacy to write off such loans. The burden on the PSU Banks is roughly 25-30 per cent of the total.
What is your view on the other measures announced for the banking sector, like the exchange traded currency futures? How do you see things playing out in the sector?
In the medium-to-long term, these measures will help banks shore up their risk management at lower costs and deepen their skills to operate in a global environment.
Do you think the Budget provides enough support to keep the infrastructure juggernaut rolling?
One important measure to boost infrastructure spending is the re-introduction of section 80(M), which does away with double taxation of dividend. This will help the holding company structure in infrastructure spending to be taken public faster and easier.
When FM says monitor and manage external capital flows, what does he mean?
The government and Reserve Bank of India (RBI) have always maintained that stable capital flows are desired than short-term ‘hot’ money. During calendar year 2007, one of the key challenges faced by RBI was the strong inflow of dollar from abroad. In this context, the government and RBI will continue to explore measures through which such flows can be calibrated and the re-appreciation can be moderated.
Do you expect a further downside in the market through March as players would rush to sell before the higher short term capital gains tax becomes applicable?
Global cues will have a greater impact on the markets than the budget.
Any other important takeaway for the markets and investors, especially MF investors, from the Budget?
With the economy being liberalised, the role of the Union budget has reduced considerably.
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