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What Fund Managers Expect from Budget 2014

Fund managers are hoping the budget will revive the investment cycle & slash unwanted expenses to control the fiscal condition of the country

After the railway budget, all eyes will be on Union Budget 2014-15 which will be announced on 10 July, 2014. Though many expect this event as a watershed event in the economic history, but fund managers are hoping that government should address the pressing issues like reviving investment cycle and slash the unwanted expenses to control the fiscal condition of the country.

The road map for Indian economy is also keenly awaited by the Finance Minster, on the back of below average monsoons and spike in crude prices. This Budget will be expected to do more than the balancing act. Gopal Agrawal, CIO at Mirae Investment Managers says, “There are three major issues which are faced by Indian economy today. First is how government plans to revive the investment cycle as it's very critical to bring down current account deficit and generate employment. Secondly, is how government plans to curtail expenditure subsidies which added around 2.3 percent of gross domestic product (GDP) last year. Finally, it will be interesting to look how FM plans to boost the revenues.”

In many ways, recently announced Railway Budget was a 'realistic' rather than 'populist' and many market players believe that even Union Budget will be more pragmatic than what we have seen in the past few years. While there are some fund managers that believe that, it should be 'more on delivery and less on promises'.

Vikaas Sachdeva, CEO at Edelweiss Mutual Fund says, “In the past we have seen that, announcement in Budget's are very high on promises and rhetoric, but the pace of execution has not happened as desired. I think right now we will be looking at small simple steps that will give broad directional guidance and how it can be taken to the desired conclusion.”

While some may be expecting steps on fiscal road map, other are waiting for banking reforms because they believe that if we wants to fix their core problems, banking sector should be the top priority. A top fund manager on condition of anonymity says, “I am only waiting for major banking reforms which are very important if we want to move out from the current mess. I think he should announce measures that will allow banks to access long term funding. It is also to be seen how will be infuse capital in public sector undertaking (PSU) banks.”

It is also expected that, pending measures like clear timetable on goods and services tax (GST) might be taken that can boost the overall environment of the equity markets. But that's not all, fund managers are also expecting that even after the Budget gets over, we will continue to witness news flows for next few months. But for that, we would have to wait for July 10, when Mr Arun Jaitley will present his maiden Budget and see whether he can create an opportunity to accelerate reforms.