Budget 2019: Will Modi Govt 2.0 Deliver on Market Expectations?

Modi government 2.0 will table its first budget on Friday, 5 July. Will the budget be aimed at pacifying market sentiments? Investment expert Basant Maheshwari explains.

Govt’s Quick Fix: Removing LTCG tax "‘To appease the market sentiments, one quick fix that the government can make is remove Long Term Capital Gains (LTCG) tax. Second, immediately start the process of privatisation. Till now, what they have been doing is they ask ONGC to buy GAIL or ask one PSU to take ownership of another. This basically leads to shifting of money from one pocket of the government to another. This isn’t a constructive solution. If the government moves ahead with privatisation only then will they start making money. Without making money, they can’t kick-start the economic structure. Budget is just one day." - Basant Maheshwari, Co-founder, Basant Maheshwari Wealth Advisor

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Market Undergoing a Liquidity Crisis; Will the Budget Offer Solutions? "“NBFC sectors are under the RBI and government. RBI says that they regulate mostly banks and they may or may not choose to regulate NBFCs. Government expects RBI to take care of NBFCs. So, at this point, NBFCs are like a ‘foster child’ who no one pays any attention to. But good NBFCs aren’t facing any problems. The problem is crisis of confidence. Let’s take a look at the best banks of India  like SBI or HDFC – and this is just for reference – we don’t want to create any panic.”" - Basant Maheshwari, Co-founder, Basant Maheshwari Wealth Advisor

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‘Govt’s Path-Breaking Move isn’t Socialism, it’s Capitalism’ "“So, we need a path-breaking move which is supported by the government. But this isn’t socialism, it’s capitalism. But the US’ Federal Reserve also did the same in 2008. They had an open buyback of toxic assets worth $4 trillion. So, I feel even though this isn’t a part of capitalism, yet with this step the government can invigorate trust in the system. Finally, one thing must be understood that if A has given B Rs 100, B has given Rs 100 to C, C has given Rs 100 to D and if D goes bankrupt then the systemic default isn’t of Rs 100. It’s worth Rs 300. So, if we lend support to D – not bail it out, but lend support to D – then by investing Rs 100 we save  a systemic default of Rs 300.But I don’t think anything like that will happen.”" - Basant Maheshwari, Co-founder, Basant Maheshwari Wealth Advisor

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Maheshwari, however, advices that the market will be narrow and selective and whoever wants to make money should look for a good company, invest in its share and they will make decent money.

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