Budget Expected to Be Business Friendly: Bank of America

Finance Minister Arun Jaitley's maiden budget is expected to be business friendly, Bank of America said.

As the country's finance minister, Mr Jaitley faces huge expectations and challenges. The country is facing its worst slowdown in 25 years after the economy grew at sub-5 per cent for the second year in a row last fiscal which ended on March 31, 2014.

"I would say there will be more fundamental changes in the budget, getting the taxation thing for particularly the FDI (foreign direct investment), getting the ease of doing business. I would say it would be more business friendly budget than more capital market supportive budget," Jayesh Mehta, country treasurer, Bank of America.

India's retrospective tax laws are seen as a deterrent for many foreign investors. The investment cycle has stalled and many key reforms have been shelved due to lack of political consensus.

Vodafone, Shell and others are embroiled in a bitter battle with the Indian government over retrospective taxation.

The markets have been expecting a "euphoric budget", but Mr Mehta expects a tepid budget from the capital markets' perspective.

"I would say it would be more business friendly budget than more capital market supportive budget, that's my expectation and thought about it," he said.

The Indian stock markets have been rising on hopes of a business friendly budget and have climbed 20 per cent year-to-date. However, some analysts see a sharp correction post the budget, as much as 10 per cent.
On Wednesday, the Sensex was trading at 25,300 levels, while the broader Nifty was at 7,500 levels.