Budget 2009 – A Hit or a Miss

If you go by the market reaction it definitely seems to be the latter. But are markets a true indicator of Indian economy. Ponder over this, according to a rough estimate there are around 10 Million demat accounts in India. Lets assume that there are 10 Million people having trading account which is not true as a person can hold multiple accounts. How much is 10 Million of the total Indian population?—1% roughly, which by no means represents a majority. Therefore it is safe to assume that stock market is not a representative of a good or a not so good budget.
Now lets get into some details of the budget. If we look into it, this budget is basically for inclusiveness. Many schemes that were introduced for rural India are been continued, for eg NREGS(National Rural Employment Guarantee Scheme) is being taken forward with an extra allocation of 144%. There is scheme for Food Security for every Indian. Other schemes like Mid day meals are also taken forward. So the finance minister has taken care of the real India which comprises of 60 to 65% of total population. The only hitch is the implementation, the budget had no mention of how the schemes will be implemented. Just a mere confidence that this money would really reach the needful and not get lost in the BABUDOM would have helped the sentiments.
For the middle class he has increased the tax slabs by a bit but abolition of FBT has put some extra pressure on the Salaried middle class. For the small businessmen he has exempted them from advance tax.
The only real concern with this budget is the estimated Fiscal Deficit which stands at 6.8% of our GDP which is high. But considering the global meltdown and the FM trying to generate a consumer and a domestic market driven growth he needs to spend now for the economy to grow in the future.
The market reaction according to me was just a way of offsetting extraordinary gains it had after the election results. It will consolidate for some time and being the results season its future course would be decided by the Q1 results of SENSEX and NIFTY stocks.
To conclude a message to all the critics, India wont be able to achieve its true potential until the poorest of poor has access to basic food and shelter. For that I think the FM has his heart in the right place.

Regards,
Yash