IT'S THE FINAL COUNTDOWN!
By Ruma Dubey
The most important days for the markets start tomorrow. One could shrug their shoulder and ask quizzically, “Why Railway Budget?” Actually, the Railway Budget starts the momentum; it’s like the first climax before the penultimate climax of an action-packed thriller.
The Railway Budget to a large extent gives us a peek into the mood of the Govt – are they going to play to the gallery or be more pragmatic. There is no doubt, this Railway Budget will also announce grandiose plans which frankly, the market has stopped believing in as the plans rarely get translated into reality. We can see the effect of this on the balance sheet of various ‘railway’ companies. But because the Modi Sarkar promises to be more action oriented, talks about getting things done, maybe we might actually see some of the plans indeed getting implemented.
The Railway Budget, just by itself is a non-event when compared to the Union Budget. So saying that Railway Budget will impact the markets would be an exaggeration. If fares are hiked, which is a much needed economical move, the markets will be happy and it would indicate that the Govt is looking beyond politics. And if fares are reduced or kept status quo, the market might not tank if reforms for the entire sector are announced. But overall, the market will look at the Railway Budget and soon look forward to Union Budget.
Between the two Budgets, like a breather, is the Economic Survey. Traditionally, it is always presented before the Union Budget. This document is basically an annual statement which is put together by the Finance Ministry of India, showcasing the economic development during the course of the year. The draft of the survey is prepared by Department of Economic Affairs and cleared by Chief economic Advisor and the secretary Economic Affairs. The final version is vetted by Finance secretary and Finance Minister. The Union Budget is a statement for the future while the Economic Survey is a statement of the past fiscal.
In that aspect, the Economic Survey is an important document because it helps us assess the performance of the country in the past fiscal, allowing us to compare the actual performance with what the Govt had promised in the Union Budget. At the same time, it shows us the general health of the economy, based on which we can get a rough idea about what to expect from the Union Budget. But for the market, this document might not mean much; it will shrug it off and begin the countdown for the Budget.
And then dawns the D-day. Expectations always run high and if looks at things from afar, we will see that every single year, the expectations are almost always the same – sops for agriculture, hike of duty for cigarette, boost for infra, capital goods, power, road projects, more new social reform schemes, increased budget for defence, higher divestment target, tax limits for individuals. And then there will be the micro sector-wise sops and it would be interesting to see whether fillip is given to auto, realty and especially textile sector.
The Union Budget is the biggest day for the financial markets, where even global markets do not matter and naturally, all energies are currently rooted only on Saturday.
Well, lets all wait for the show to begin. And like watching a movie – do not go in with too high expectations or else the performance will fall short.