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Will Nifty repeat Itself....? Union Budget vs Growth vs Value

We are not talking here anything relates to the COVID19 era. It is before that. History tells that before the Union Budget announcement by the Indian government, it always show flip flop downside.

The million-dollar question, do you think it will different this time?

Last year in 2019, Nifty fell down from 12430 to 11630 approx (800 points) fifteen days before budget announcement, before moving up to 12157 in February itself.

"The Indian economy is likely to contract in the range of 5-7.5 percent this fiscal but will see a growth of 9 to 11 percent in FY 2021-22", former chief economic adviser Arvind Virmani said on Friday.

Good numbers of GST collection from the last 4 months can give a boost up to Mr. Virmani's statement that "India can't become 'Aatmanirbhar' with the 20th-century Direct Tax Code (DTC). The eminent economist also emphasized that there is a need of 15% uniform GST rate for 75 percent of goods and services.

In the upcoming budget, the govt needs to move beyond supply-side interventions and develop innovative ways of boosting demand in the economy. The role of the government on this front has become essential given the soaring unemployment levels in the country.

A possible solution in the short run can be tied with the pandemic itself. India can take a leaf out of the US stimulus package announced last month. One of the deals in the package comes in the form of Supplemental Nutrition Assistance.

The upcoming budget will most likely provide a similar boost in infrastructure spending to revive demand in the economy. But the government needs to do more to make its investments effective.

The problems in infrastructure lie beyond investment alone. Data from the quarterly reports released by the Ministry of Statistics and Programme Implementation (MoSPI) show that over the last six years, central government infrastructure projects have run into significant time and cost overruns. The leading causes for these issues have been regulatory clearances, land acquisition, and fund constraints.

We will cross our fingers and eyes wide to see if this comes different from the past?

We hope so.

Keep your eyes on values stocks only, which will be fruitful in the long run.

Keep Trading

Happy Investing


Neeraj Bhatia

Managing Director

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