Indian rupee ended higher at Rs 47.60 per USD as against its previous close of Rs 47.70.
Abheek Baruah, Chief Economist at HDFC Bank spoke exclusively on CNBC-TV18. Also watch accompanying video
Q: What would you look out from the Budget to change your numbers, would you say that there is room for fiscal stimulus or do you think the bond markets anguish with fiscal deficit will keep up all that reigned in?
A: No I expect to see some positive surprises on things like disinvestment and so on. The way I look at the bond market today is pricing in the overrun in the expenditure side a little too aggressively and not looking at the receipt side too carefully. So what is likely to happen is that as the Budget is announced we seeing some clarity on how the fiscal gap will be breached. You might see a reversal in the 10year bond cycle and I think it should look toppish at around 6.75% and once that happens there will be more comfort for banks to lend because today there is a bit of a disconnect between lending rates and the 10 year bond yield.
