The Finance Minister will present the FY2013-14 budget amid high expectations.
The initiation of the reforms process over the past four months has raised expectations about continuation of the same in the budget.
Moreover, the FM has already indicated that this will be a 'Responsible Budget' with FY14 fiscal deficit pegged at 4.8%. Markets are now looking out for an 'achievable budget'.
The FM's priority in the 2013-14 budget will be fiscal rectitude.
A lower fiscal deficit will leave more money for the private sector and moderate interest rates. The rating agencies are also closely watching out for any further fiscal slippage.
India needs to sustain and improve the strong capital flows of CY2012. We expect the FM to stick to the revised fiscal deficit of 5.3% for FY13 and budget for a 4.8% deficit for 2013-14, based on a nominal GDP growth expectation of 13% in FY14.
EXPECTED SECTORAL IMPACT
POSITIVE: Banking, NBFCs (Non-banking financial companies), Capital Goods, Construction, Media, Oil & Gas, Power, Real Estate, Shipping & Logistics
NEUTRAL: Automobile, Aviation,Cement, FMCG, Hotels,Information Technology, Metals
Text: Dipen Shah, Head of Private Client Group Research, Kotak Securities and the Kotak Securities team
Images: Reuters, IBNS