Surendra Goyal, MD & head-India equity research at Citi and Samiran Chakraborty, chief economist at Citi, shared their key expectations from Union Budget 2019.

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“We think that it’s still possible to meet 3.4 percent (fiscal deficit) number without too many unrealistic assumptions,” said Chakraborty said on Wednesday.

“However, what we need to do is to get the expenditure side well calibrated because what is happening over the years is that we are budgeting somewhere on the expenditure but actually not spending that much and pushing money into the off-balance sheet way of spending,” he added.

“As long as we make our expenditure forecast in line with what the true numbers are, it is still possible to get to 3.4 number,” Chakraborty said.

Talking about the tax revenue number, he said, “Direct tax is consistently showing tax buoyancy of more than 1 which means that tax revenue growth is more than the nominal gross domestic product (GDP) growth. So we are working with nominal GDP growth of about 11 percent. If you take more than 1 tax buoyancy you will get 13-14 percent of direct tax revenue growth.”

Goyal said that their single biggest concern is earnings recovery. what has happened in many cases which is why some

“The challenge has been that the bottom up estimate has always been little optimistic and what I have been writing is, there is a risk to it and that still remains. So when you look at bottom up for this year also, our analysts are building in 20 percent plus and out of that 3/4th is just financials,” he added.

Talking about the Budget, “In the last few years the budget has not been a big driver for the equity markets and that is what we continue to expect at this point of time.”