Budget 2021: GDP decline already factored in by markets, says Sharekhan; lists top pre-budget picks

Brokerage Sharekhan believes that the decline in the gross domestic product (GDP) has already been factored in by markets. The GDP decline scenario is mirrored across the world and therefore, the revised deficit figures for FY20-21 won't be a major surprise, the brokerage said in a pre-budget report.

Pointing at the impact of the unprecedented coronavirus pandemic and its impact on the economy, Sharekhand said that it is the first instance where India has seen an economic contraction in the last many decades. It is also the first GDP decline since the country began publishing quarterly numbers in 1996. The budgeted estimates for FY2021 alter dramatically, therefore, and the revised deficit figures for FY2021 are unlikely to be a major surprise.

The government is expected to limit the fiscal deficit to 7 percent of GDP, despite higher expenditure and lower revenues for this fiscal. Yet, the economic recovery has surprised pleasantly and is likely to turn positive in Q3 FY21 itself after the massive decline of 23.8 percent in Q1 FY21, the brokerage noted.