Budget that pricked the crypto currency bubble
Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities
The government chose to defer the fiscal consolidation and targeted 6.4 percent budget deficit. Putting priority on growth over fiscal consolidation is the need of the hour. We may see some murmur from rating agencies but markets will not wait for their pronouncements.
The government will find it challenging to reign in the deficit in the next year's Budget as well, a penultimate year before the general elections.
Market players were looking for a reprieve on taxation to foreign investors settling sovereign bond purchases on Euroclear to speed up the inclusion of the sovereign debt in global indexes. That inclusion of government securities in global bond indices would have increased the share of FPIs (foreign portfolio investors) in the specified securities and thus in total government debt.
The inclusion would have led to significant flows and the market was factoring it. Till the time of writing this, it seems that no such provision is part of this budget. I am expecting Rupee to head back towards 76 a dollar.
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India is among the last of the large emerging markets that has not been included in the global bond indices. This will have to wait a little longer now. It is obvious that this higher borrowing will lead to higher yields and weaker currency. Indian bond yields started hardening, and I think this weakness will accentuate till the RBI steps in to restore order.
Budget that pricked the crypto currency bubble
This Budget will be known as a seminal event in history of debate on crypto's use case as a currency. The Finance Minister (FM) has not minced words while criticising crypto currencies.
The RBI will issue a digital
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