Friday, February 19, 2010

Mr Gaurav Dua (Head of Research), Sharekhan Research Team

The forthcoming Union Budget will be announced against the backdrop of a gradually recovering economy with spiraling inflation and a tight fiscal position. While the Indian economy is better placed than it was at the time of the previous Union Budget, the situation for the government remains equally difficult as it tries to maintain a delicate balance between withdrawal of stimulus, sustaining growth and fiscal realities.
Overall, our expectations from the budget are centered around (1) partial withdrawal of stimulus measures such as rollback of excise duty cuts and service tax concessions; (2) focus to return on fiscal consolidation; (3) continued spending on social and infrastructure sectors; and (4) clarity on some of the reforms.
Some of the key expectations from the forthcoming budget are as follows: The withdrawal of fiscal stimulus (selective rather than across the board). In line with the same, the return of focus on fiscal consolidation with targets to reduce the fiscal deficit. Continued focus on social sector programmes and infrastructure development. More clarity on divestment policy. Reform announcements (fertiliser subsidy, clarity on goods and services tax [GST], foreign direct investment [FDI] in insurance and media sectors). The negative surprise can come in form of tinkering with capital gains tax in line with some of the draft proposals of direct tax code.

Mr Gaurav Dua (Head of Research)

Sharekhan Research Team

No comments:

Post a Comment