Foreign investors are looking for more clarity in the upcoming budget and a significant increase in big ticket spending, along with the ease of doing business in India.
"There are several things that the budget can do, but we can start by simply presenting the budget in a much more transparent way. I mean, I look at budgets of many countries around the world and the Indian budget is simply very opaque," says Sanjeev Sanyal, Global Strategist, Deutsche Bank.
"It would be a big improvement simply to provide us better transparency by presenting the budget in a different format. That would be a big help. The second important thing could be to radically simplify the tax system," he adds.
He further says that it is a matter of getting serious about government expenditure and making sure that some of these plans are actually put on the ground. So, those would be the three sort of broad things that would be very helpful.
Well, the budget is just another event and it is not the only day when all financial decisions have to be taken by the government. But this year hopes are too high mainly arising out of growth agenda set up by Modi-led government.
"I just need to clarify, we are long-term investors. So we see the budget announcement as more of a milestone for the overall reform agenda from the new government. So, rather than focusing on the detailed specifics, we want to look at the broad package as a milestone," says Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team, JPMorgan Asset Management.
"Having said that, we would like to see a good balance between fiscal consolidation and the spending planning and areas such as tax reform or in the stimulating key infrastructure projects," she adds.
Kuroki further adds that shifting more from public spending into wider participation from the private sector, ease for foreign investors to do business in India, these items would be quite interesting to see from the budget.
Riding on the Modi wave, foreign investors have poured in $8.21 billion into the Indian stocks and debt since the start of the year. At that pace, they could beat a record $42.34 billion invested last year, said a Reuters report.
In the past 20 years, according to data collated by analysts at UBS, India's index for top companies on the National Stock Exchange ( Nifty) has outperformed emerging market peers four out of five times following the government's maiden annual budget.
But it would be unfair to compare India with other BRICS, says Robert Parker, Senior Advisor, Credit Suisse. "If one just looks at the BRICS countries, for example, this year we have got a severe contraction in growth in Russia, Brazil growth at best is going to be 1% and then, South Africa, the S of the BRICS, has a number of very major political and economic issues," adds Parker.
"The first point to make is that the outlook for India from a growth perspective is positive and is particularly positive relative to the other major emerging markets. Now in terms of this budget, investors are going to be looking at the detail as to see whether the government can ensure that that acceleration in growth can come back to over 6.5%," he adds.
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