How are we placed in terms of the economy and stock market levels at an aggregate level? Let us start with the economy first. Clearly we are still suffering from the aftershock of the demonetisation policy and anybody who thought that such an important and transformational change can happen without some element of pain and perhaps sustained pain wasn’t bargaining right at all. What we are going through now is a natural outcome of a transformational policy perhaps the most transformational since independence in India. What that has done is it has reduced the fire power of one engine, the consumption engine that was propelling the Indian economy at this point of time. Clearly, corporate earnings are going to be diluted and disappointing. Therefore, if you reflect that on the market at this point of time, perhaps the market is correctly reflecting that dilution in corporate earnings. However, nobody is going to be able to time the market perfectly. Therefore, if people said, is this is a good environment to start considering buying and getting back to the market? I would say it is the start of a good environment and perhaps some of the early buying of 2017 reflects that any which way.

On being more cautious: I would say that clearly now and perhaps for Q1, perhaps for the first of 2017 we continue to be cautious. Having said that, I remain optimistic both on the market and on the Indian economy in the medium-term to long-term. Whether that turning point will be at the end of Q1 of 2017 or the first half of 2017 calendar year one still does not know what the right timing could be.

Post the painful period what are the changes for the better that we will see because of what has been done? My own view is that there are some significant positive outcomes once this whole sustained attack start showing positive results. One, clearly, there will be a significant amount of money that will go into the banking system and therefore  financial intermediation becomes a very important positive growth phase from there onwards. Second, once banks gets a significantly larger supply of money coming through it, we have reasons to believe that long-term interest rates will drop. Cost of capital in this country will drop. We have to be competitive on our cost of capital if Made in India has to be a serious and a successful dream for us. Third, our tax to gross domestic product (GDP) ratios is appalling at 11-12 percent. It needs to move to 20 percent and I would like to believe that the reset that the Prime Minster has set will help us achieve that over a longish period of time. Once we get to those numbers, we are in a significantly better position and we are in a significantly better monetary position I would like to believe.

On budget: Perhaps, some of the more populist measures have already been announced by the Prime Minster. Having said that, I continue to be positively inclined towards what I think will be the contents in this Budget. There will be a lot of focus and attention on planned government expenditure on infrastructure and in terms of capital expenditure (Capex). I also see a rationalisation of tax rates. I recognise that thus far, reduction in tax rates, both in 1997-1998 and once or twice after that, have not resulted in commensurate increase in tax collections. Government will have to play a balancing game between not disturbing fiscal prudence and providing tax concessions. But recognising that both demonetisation and goods and service tax (GST) after that is hopefully going to result in due course with significantly larger collection in taxes government could perhaps prepone some of the tax concessions and start the process with the Budget this year. So overall, there will be decent and good news in the Budget even if there are some populist measures.