Neither popular nor populist

Arvind Chari, head - fixed income & alternatives, Quantum Advisors

The Budget was neither Popular nor populist. It was a rather tepid budget, as has been the case lately.

We liked the governments focus on fiscal prudence and the commitment, although delayed, to move fiscal deficit to 3.0% of GDP next year.

The budget proposals are not inflationary and thus if food prices remain benign, we could expect some rate cuts by the RBI.

Bond markets should like the lower net and gross borrowing number as it will lead  to lower government bond supply.

The decision to abolish FIPB and political funding reforms will be the key legacy of this budget announcement.

Absence of any tinkering to long term capital gains on shares should sooth equity markets.  But there is nothing significant in the budget to boost the economy and revive the sluggish capex cycle.