A key point to look up in Budget 2017 will be the money the government would spend to boost the country’s infrastructure. Money allocated to railways, roads, bridges and power sectors could go up compared to last year. When this happens, companies in these sectors get new orders and revenue visibility. Stocks cheer higher investments.
Also read: Union Budget
The government is expected to allocate more money to social welfare to ease the pain of demonetization. Things like a Universal Basic Income for all could be a dramatic announcement besides more allocation to healthcare spending and education.
The budget will also give a peek into the changes expected in tax revenues due to demonetization and the potential implementation of GST. In fact, GST and demonetization could be the two most important words you hear in this year’s budget. Apart from these, the revenue target from disinvestment will be important.
Besides the GST, there is expectation of a cut in tax rates for individuals and corporates. If that materializes, it would give a boost to consumption. A sharp cut in taxes without affecting the fiscal deficit could cheer the markets.
Also read: Highlights of Union Budget 2019
This will always be an important number. Despite the government spending more on infrastructure and social welfare, markets and experts would want the government to meet requisite targets. The fiscal deficit equals the amount by which the government’s expenditure exceeds its revenue. It then borrows this money from the market. If the borrowing remains the same or is reduced, there is scope for interest rates to go down further. However, if it increases then interest rates may hold. Markets may not appreciate an increase in fiscal deficit.
On Budget day, the market could be volatile. So, ensure you are confident about your trades. Do not follow the herd, but your own research and analysis.
Also read: Union Budget 2019 vs. 2018
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