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MOSL: Morning India (8/July/19): 1. Union Budget 2019-20 (Center chooses to stick with fiscal prudence); 2. Financials-NBFCs (Measures to resolve NBFC liquidity crisis)

MOrning India (8/July/19): 1. Union Budget 2019-20 (Center chooses to stick with fiscal prudence); 2. Financials-NBFCs (Measures to resolve NBFC liquidity crisis)

 

Today’s top research theme

Union Budget 2019-20: Center chooses to stick with fiscal prudence

• Compared to the Interim Union Budget 2019-20 presented in Feb'19, the headline fiscal numbers remain unchanged. In fact, although the fiscal deficit target for FY20 is reduced from 3.4% to 3.3% of GDP, it is kept unchanged in absolute terms at INR7.04t.
• Overall, since the government has kept GMB and NMB targets unchanged, we continue expecting the RBI to conduct more open market operations (OMOs) to ease the bond market fears. The announcement of higher participation of foreigners in treasury markets will also help the bond markets.
• Finally, except the excise duty/cess hike on petrol/diesel, there are no measures in the Union Budget 2019-20 affecting inflationary pressures in the economy. Therefore, we continue believing that the reasonable headline fiscal targets and very comfortable inflation will allow the RBI to cut policy rates by 25-50 basis points (bp) in the remaining months of FY20.

Piping hot news

IL&FS road projects: 6 investors show interest in asset sale

• At least six investors that include I Squared Capital, Canada’s CDPQ, NIIF, Brookfield, Edelweiss and Lone Star are understood to be conducting due diligence ahead of submitting their bids for 18 road assets of IL&FS, a source aware of the developments told FE.