We have now entered the last lap of the run-up to the Union Budget. Its like the “Oscar” event of the Indian financial world. And the markets will now only meander, waiting for the FM to give sops.
Earlier, it used to be first the Railway Budget; it generated no real excitement but it created a sort of preamble for the coming Union Budget. Between the two Budgets, like a breather, was the Economic Survey.
And the ritual still remains. On 31st Jan, following the tradition of presenting this a day before the Nudget, e will have the Economic Survye. 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 we look 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, let’s 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.