Technology

As expected, this interim Budget turned out to be much more than expected. There
was a fiscal slippage in FY19 to 3.4% against budgeted estimates of 3.3%, though
it was less than market estimates of 3.5%. However, fiscal deficit for FY2020 at
3.4% was ahead of market estimates and significantly ahead of 3.1% as mandated
by the FRBM Act.

We believe that tight fiscal and monetary policy over the past few years coupled
with major structural changes have taken a toll on growth and the dynamics are
not conducive for an inflationary environment. On the contrary, we believe that
slippage of 30bps for FY20 (in relation to FRBM mandated rate) was a much
needed fiscal stimulus and would actually go a long way in addressing the current
rural distress and stimulating growth without stoking inflation.

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