Expect FY18 GDP growth at 6.5-6.7%; keep a watchful eye on bond markets

The Gujarat results and the Himachal Pradesh results both continued with the stable government at the states and the centre, so I do believe that the current policy of fiscal discipline and building sustainable growth would continue.

On the rural sector and agri sector: On the whole area of rural and agri sector we are going through a period of what I call as transition from an informal economy to formal economy and some of these measures are having issues on friction, but fundamentally when we are going for transformation of a nation friction is part of the game.

I think global strategic capital is getting very excited about US tax rates and therefore as India focuses on encouraging global capital a competitive tax environment is going to be very important for sustaining the investment growth in the country.

On a more fundamental basis my view is Indian markets, equity markets in particular need to keep an eye on the bond markets and that is where I think you have seen increase in interest rates. I think short-term funding cost are also inching up and therefore the real aspect which equity investors must watch for is what is happening to interest rates bond markets the Budget and levels of fiscal deficit.

Is the macro story now from benign turning to be more challenging? I think we have moved from a macro which was having a lot of tailwinds to a macro which doesn’t have as many tailwinds. In fact we are seeing a bottoming out of macro benefits India had. Having said that the micro story is beginning to pick up. We are beginning to see early signs of growth. We are seeing it in the banking sector and I believe that loan growth will pick up. As the economy on a micro basis begins to grow the big challenge will be to keep the macro factors reasonably under control. I am quite bullish of micro growth while macro growth as certainly got less benign than it was.

Outlook on growth : I think we should do this full year between 6.5-6.70 percent which means second half both third and fourth quarter at 7 percent plus, but keep in mind we are starting from a low base because of last year second half being much slower than otherwise. So, keeping that in mind I think second half is 7 plus and I would like to believe that we go into 2018-2019 at or around the 6-6.50 growth mark which I think on a sustainable basis India needs to grow faster.

Priorities for the budget: I think top three priorities for the Budget - number one - keep the fiscal discipline, maybe a little bit here or there is okay but nothing dramatic.