Market Awaits Budget with Hope for Boost in Mass Market Consumption: Sunil Subramaniam
Market participants have paid considerable attention to the forthcoming Budget with the expectation of the steps that might go to encourage mass market consumption. Sunil Subramaniam, a market veteran, is hopeful that consumer expenditure will feature top in the Budget, more specifically targeting the poorer sections of the economy. The strategy would benefit from a more positive domestic institutional investor view.
The government's focus is on the bottom of the economic ladder, outside the tax ambit", Subramaniam said. He expects financial support to this group to be one of the key objectives. While no major tax overhauls are expected, he predicts a possible increase in the tax threshold for lower-income groups, which may result in higher disposable incomes and spur consumption.
The official sought to address rumors that had been doing the rounds in market circles, particularly through WhatsApp groups, regarding drastic tax changes such as merging capital gains taxes with income tax slabs. "These concerns were self-initiated and unfounded", he clarified. He added that this gives a sense of relief to investors since there were no negative surprises. Clarification also indicates that the government is confident about its revenue streams, thus less likely to disturb the tax reforms.
Subramaniam mentioned that the immediate focus of the government would continue to be revenue expenditure for upgrading the economically poor. This ties in with the overall goal of promoting grassroots-level consumption. Any developmental capital spending would also continue to target benefits directly to the common man to further spur activity in the economy.
When asked if the Budget may contain earth-shaking changes, Subramaniam said that the government needs to strike a balance between revenue and capital expenditure. "The government has to focus its efforts more on consumption expenditure while retaining fiscal comfort. A tilt towards populism, as evident in some of the state elections recently, may influence the Budget's priorities, as major elections in Uttar Pradesh and Bihar are around the corner", he explained.
He thinks a small reallocation of resources towards consumption is on the cards, which will probably go well with the institutional investors back home. He noted that such a move will underscore the commitment of the government to the grassroots needs and will also show prudence in its fiscal measures.
The market expert admitted that the calmness of being free from shock measures in taxation is a blessing. "The absence of a negative surprise is a positive in itself", he said, adding that investors can now shift their focus onto more constructive prospects.
In conclusion, this Budget is expected to play a pivotal role in shaping economic priorities, balancing consumption with developmental expenditure. Market participants are keenly watching whether it can drive mass market consumption, which could bolster economic growth and deliver long-term benefits. As the government navigates fiscal challenges, Subramaniam remains optimistic about its focus on fostering grassroots-level prosperity.
