It’s budget time again, and investors have the twin worry of domestic and global sentiment to factor in next week. The Government has a relatively lighter task. The expectations are running low, and promises are also not going to be too difficult to live up to. The last budget saw the Government promise very little. Estimates were very conservative and on the side of caution.
What an investor must look for in the budget is how the Government lived up to those low expectations it set for itself and how fresh expectations are set for next year. Economic growth, revenues, and deficits are three critical areas that investors must closely pay attention to. It is time for the Government to raise the bar and set higher expectations.
While last years expectations are most likely to see a beat, it is important for the Government to set expectations that are difficult to beat next year. Only then we will be able to crank up the economy to a better growth trajectory.
Growing next year is very critical. The rate of economic growth must be something that the markets like. This economic growth must contribute to revenue growth. The Government must be able to improve its performance on deficits. Next year we need to see higher economic growth projections, better revenue targets and moderate deficit goals. Importantly investing must continue and Government spending on infrastructure must remain high.
Beyond that, the message of the budget must indicate confidence, a sense of direction and make investors believe that the budget would be achievable. If that is met, this Government would’ve delivered a budget with a low trust deficit. That is the need of the hour.