Moneycontrol » News » Markets » Analysis Thu, Jan 24, 2013 at 16:30 'Mkt will make Chidambaram pay dearly for a bad budget'

Finance minister P Chidambaram is on a road show meeting foreign investors to "sell" the India story. According to Udayan Mukherjee, Chidambaram has not has no option left now. He says the FM has laid his cards out now. He has gone to Singapore, Hong Kong everywhere saying “I will give you a good budget”.

“If the FM disappoints on the day of the budget—he could have sold a few thousand crore of government paper before that—but the market will make him pay dearly for that in the months that will follow. He has still got a year in office after the budget this time around and he needs to sell a lot of paper to get to that 4.7-4.8 percent fiscal deficit target next year,” Mukherjee says.

And Mukherjee does thinks not think the game is done by saying Oil India and National Thermal Power Corporation (NTPC) divestment before the budget. “I do not think he (FM) has that kind of short-term goal in mind only. Having laid out his credibility on his sleeve to foreign investors, he will have no choice but to deliver in the budget. I do not think the budget will be a howler, but whether the world goes into risk off for some reason over the next few weeks and that accentuates the pain that we are seeing right now and shakes off some of the complacency that we have seen in the market. That is a possibility that cannot be ignored. I just hope we do not look back at today’s trade a few days down the line and on hindsight it appears like a turning point in the market,” he says.