Ashok Wadhwa, Group CEO, Ambit, on Wednesday said that the market is unlikely to react negatively if the fiscal deficit widens a bit and added that the government is slowly moving the economy in the right direction.

Referring to the recent announcement by finance minister Nirmala Sitharaman slashing corporate tax, Wadhwa said, “This finance minister has shown an outstanding understanding and appetite to slowly but surely move the economy in the right direction.”

“My own sense is that the government is now keen to see that this flows through both on investment side and demand side,” he said in an interview with CNBC-TV18.

“New companies, particularly global companies that were otherwise investing in China and are looking at new opportunities to invest, were relocating to other Asian countries and the government is trying to seize that opportunity to see if these new investments can relocate to India,” Wadhwa mentioned.

According to him, existing large companies in India that have underutilised capacity are unlikely to make further capex but even if they pass the benefit to consumers, it will help the demand side. "So either way it is a plus-plus," said Wadhwa.

With regards to the market, he said even after some of the correction that took place, the Indian market was not necessarily cheap compared to other EMs.