Union Budget 2017: Kotak Bank sees economic growth in 3-4 months if proposals are implemented

Mumbai - Implementation of the Union Budget 2017-18 proposals is extremely critical and actions in the next 3-4 months based on allocated expenditure could bring the first signs of growth, said Shanti Ekambaram, president of Consumer Banking at Kotak Mahindra Bank.

“Implementation is very critical because we coming out of demonetisation phase, however consumption has taken a hit and private investment is not there. Implementation immediately is extremely critical to kick-start the economy,” Ekambaram said while participating in the ‘Budget Classroom’ organised by Firstpost.com immediately after the presentation of the budget.

Arun Jaitley presenting Budget2017- Feb 1, 2017_380

File picture of Arun Jaitley presenting Union Budget 2017-18

Kamlesh Rao, Managing Director, Kotak Securities said that the adherence to fiscal prudence in the last one year and the commitment to follow the path in the years to come, inspires confidence in the government. Referring to pre-budget apprehensions on long term capital gains tax, Rao said that at times if there is no bad news, is good news for the markets.

Calling the budget ‘pragmatic’ one, Mr. Nilesh Shah is the Chief Executive Officer and Managing Director at Kotak Mahindra Asset Management Company Limited, said, “Within the constraints the finance minister (FM) operates in, he has provided very good push to the capital investment, put money in the hands of consumer and yet maintaining the path of fiscal prudence.”

The budget has kept the fiscal deficit target at 3.2 percent against the earlier promise of 3 percent, and had set the market borrowing programme at Rs 4.25 lakh crore for the budgeted fiscal, against Rs 4.07 lakh crore utilised during the current fiscal so far.

International rating agencies are usually very sensitive to fiscal prudence. But Ekambaram says that the global agencies should be able to be confident just by the fact they India will stick to fiscal prudence, by ensuring tax buoyancy and disinvestment of PSEs.

“The budget could have been ‘populist’, given that there are elections in nine states during the year. But I did not find anything populist in the budget at all. The entire focus has been on consumption and investment,” Ekambaram added.

Shah pointed out that the rating agencies are very moody and demonstrated very poor standards while rating India in the past. Drawing parallels between India and Greece in debt repayment record, Shah said, “For over 5,000 years, India has the history of repaying debt to foreigners, never defaulted. For the global rating agencies that has not been good enough period. For someone like Greece, which has defaulted virtually every 20 years over the last 400 years, was consistently rated higher than India.”

On the favourite sectors after the budget, Rao said that cyclicals are finding favour with the market. Low interest rate beneficiaries like auto and auto ancillaries, infrastructure projects, NBFCs funding low cost houses (which were given the status of ‘infrastructure projects’ in the budget) will benefit from the budget in the medium to long term. “Of course, as for companies, those having sound financial management and low levels of debt are the ones that will get benefitted,” he added.


Published Date: Feb 08, 2017 11:29 am | Updated Date: Feb 08, 2017 11:35 am


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