The Union Budget 2017 to be presented on 1 February will be devised with a "redistribution perspective" as the government would have to deal with the feel-bad optics of the severly distruptive demonetisation, feels Rajiv Malik, senior economist, CLSA.
In an interview to CNBC-TV18, Malik said one thing to watch out is how far will the demonetisation bring the informal unaccounted economy into the formal banking network and how far will itboost the government's revenue.
He reminded there is nothing much happening on the private capex front while the public capex has been doing well as much as potentially it could.
"Private consumption, which is what was holding up growth at least for a couple of quarters will have a set back because of this currency exchange playing out. So the question really is, even if it is an experiment whose implementation has gone horribly bad, how do you reverse that fee bad optics to a feel good optics and that is where to the extent that the government gets a bit of a revenue boost that can be distributed," he told the channel.
In this context, he said he sees the Budget from a redistribution perspective.
"I do not think there is going to be a whole lot of new initiatives per se. There will be very much a focus in terms of improving whatever currently has already been announced, but most important is going to be in terms of generating a feel good factor which clearly has to come from some good he has given to either individuals from a higher exemption limit to the pro-poor, pro-rural areas," he said.
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Updated Date: Jan 13, 2017 20:30 PM