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
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i have gone through the budget stories.. though i havent got time to get into the details, and neglecting the market response to it, i would say the Budget is more or less the same except for the FBT clearance and some relief in the IT tax.
ReplyDeleteIts a kinda safe step taken to prevent anoder Fallin economy and also to plan long term.
i am not in a position to rate the Budget. But i wud say it has passed for sure.. may be with grace marks or with 1st class...
any ways check this
chek this : http://uk.reuters.com/article/idUKINBUDGET20090216
ReplyDeleteThe budget was expected to be full of 'Reforms' but it did not turn out to be that. The focus , Yash rightly said was on rural India.
ReplyDeleteThe FM actually did not give any hint of the course the governemt is going to take to revive the economy in years to come. Even that would have done the trick for the markets.The people are unclear wwhere the budget is going to take them.
My biggest concern is the execution the the already made plans. It would bwgood sign if the govt is able to successfully finish these projects.
For hte time bieng I can only hope for more Reforms.
I think Yash is right in his overall rating.
ReplyDeleteIt is not as glamorous as some of the previous budgets simply because of the fact that we are in a phase of recession.
Although I do not completely agree to his point about FBT.
The last point I would like to put forward is about the concern which he has raised. It is even more sever than 6.8% as 3.2% of State Deficit and 2.5% of Oil and Fertilizer bonds are not accounted in this FD.
This means that we have a practical FD of around 13%.
Assuming foreign sources of funds are used completely, the FM has to look acutely towards Disinvestment.
Njy lif!!
mate i am concerned about FBT since it puts the onus of tax back on employees from the employers. So as per my understanding the fringe benefits(petrol allowance for example) will be taxable for the employees as per the tax slab he falls into. so if an employee falls under 30% tax bracket and gets 10000 as petrol allowance then he will pay 3000 as tax now as opposed to 6.8% flat deducted directly from source earlier by the employer.
ReplyDeleteVery rightly said by Yash that the government has thought more about the population that is most in the country and just hope that even half of what is promised is being delivered to the people. In the light of the current economic scenario across the globe this budget should be taken as a balancing one and the preparation of a better budget ahead. There should be time given to this government and we should not just rush behind the market reactions and just go about saying that it is a very depressing one. One of the major concerns this time is the lack of the rains that might take the prices of food products high which would be really bad at this point of time. Hope that Lord Indra keeps mercy on us also and there is no much hardship for the common man at the end of the day as finally The Budget should be for the common man , by the common man and of the common man .
ReplyDeleteI was of the opinion that the employers were charged FBT and THEREFORE - the employers had to "re-design" the pay-structure so that the "allowances" allotted to the employees are foregone and the basic pay of the employees are hiked instead with variable PF options.!
ReplyDeleteI was under the conception that FBT was good for employees and bad for the employers (pockets).! The budget, I thought, had to give some slack to the corporate tax payers too.!!
All said and done, what has the budget given to an average individual, like you and me?
ReplyDeleteIf you dont have a convincing answer, you know my answer to your subject line!
Agreed mate...this budget could have done more for us...it by no means is an ideal budget...but it has hit the right chords....and more over we select a government for 5 years and the policies are also made like wise...so patience is d name of the game for now...:)
ReplyDelete