Budget 2016: What Dalal Street expects from Arun Jaitley

Text: Aprajita Sharma

Markets may have snapped four-day long losing streak on Friday, the sentiment still remains negative. If analysts are to be believed, Dalal Street may not witness pre-Budget rally unlike last many years. As Budget 2016 approaches, here is a wrap-up of what market mavens expect from Fianance Minister Arun Jaitley on the D-day:

Infrastructure investments: Investors expect Budget 2016 to be more pragmatic in channelising the government resources for infrastructure development and in turn creating multiplier impact for the economy. Roads, railways and energy, especially renewable sectors must be focused upon.

Fiscal prudence: Investors believe fiscal consolidation path should not be altered. They expect benefits from the fall in international crude oil prices to be judiciously used. As government has already taken decisions on wage revision and food subsidies, which are inflationary in nature, and will contribute to fiscal deficit, any major slippage in fiscal roadmap on account of fresh subsidies or otherwise will be viewed negatively by the markets.

Taxes: The tax regime in particular should turn investor friendly and issues like retrospective tax should be given a burial, say marketmen adding foreign investors will find an announcement to this effect reassuring.

Capital infusion in PSBs: Street expects a much higher allocation and also a clear road map for capital infusion into public sector banks.

Rural push: Investors expect the budget to introduce measures to stimulate the agrarian economy especially given the deficient monsoon-led slowdown over the past few years. However, they add, stimulus measures should be more oriented towards improving productivity and efficiency of system by building rural roads and improving irrigation system rather than redistributive expenditure like subsidies/redistributive expenditure.