Straight from the Specialists
(Rajan Ghotgalkar is Managing Director of Principal Pnb Asset Management Company. The views expressed in this column are his own and do not represent those of either Principal Pnb or Reuters)
Rating agencies have left India’s sovereign rating unchanged after the 2013 Budget. A rating downgrade would mean India getting junk status which is certainly not something one would want when the current account deficit is widening.
Of course, despite our proud finance minister not admitting to letting rating agencies dictate his budget, I am relieved that the nearest and sweetest low-hanging fruit fell into his lap.
In the post-liberalisation years, I have often wondered about the diminishing relevance of the budget. India’s macro-economic challenges stem almost entirely from structural imbalances and none of these can be addressed in the budget, which is at best a summary of the fiscal impact of initiatives driven by numerous ministries. The poor finance minister bears the brunt of the limelight.
(Any opinions expressed here are those of the author and not of Reuters)
This year’s budget will be an interesting one and it will hopefully be more pragmatic than populist.
Not much has changed since Pranab Mukherjee presented the budget in 2012. At the time, India was battling high inflation at 9 percent, fiscal deficit at 5.9 percent of GDP and a current account deficit (CAD) at 4.2 percent of GDP.
(Any opinions expressed here are those of the author and not those of Reuters)
Over 15 years have passed since P. Chidambaram presented what was called the ‘dream budget’. It was a budget that changed the discourse of financial policy and offered a vision of India matching the growth and dynamism of the tiger economies of Southeast Asia.
In the last full budget of his government’s term, the finance minister once again has a chance to alter the discourse of policy away from handouts and towards efficiency. Our advice to him is to be as bold in ideas as his conviction permits and as ruthless in execution as the law allows. A few ideas for him to chew on:
(The views expressed in this column are the author’s own and do not represent those of Reuters)
There wasn’t much point-to-point movement on the Nifty but it was not a listless week by any standard.