Budget FAQ: Explaining the Dynamics Between Share & Bond Markets

BloombergQuint’s Pradeep Pandya explains the dynamics that exist between the share market and the bond market in an easy-to-understand manner.

(Photo: The Quint)

With the last full Union Budget of the Bharatiya Janata Party-led NDA government set to be presented on 1 February by Finance Minister Arun Jaitley, different people have different questions and expectations regarding the same.

Responding to a question from a share market investor, BloombergQuint's Pradeep Pandya explains the dynamics that exist between the share market and the bond market, in an easy-to-understand manner, using relatable analogies.

It is important to note here that the share market and the bond market together make up the capital market. We attempt to understand here the differences in the interests of the share market and the bond market, and how they affect one another.

Now, considering this is the last full Budget of the NDA government, many people are expecting that it would be a populist one. The Budget Session of Parliament kickstarted on Monday, 29 January, when the Economic Survey was tabled by Jaitley in the Lok Sabha. The survey predicts India's GDP growth to be 7-7.5 percent in 2018-19 – up from 6.75 percent. The survey cited current high oil prices as a major point of concern, and predicted the growth in the services sector to be 8.3 percent.

The report also considered employment, education, and agriculture to be the focus areas for the medium term.

Among the major expectations by the people regarding the upcoming Budget include raising the income tax exemption limit and tweaking tax slabs, taking concrete measures to counter large-scale unemployment, as well as giving the education sector more emphasis and allocations.