Mr. Rajiv Anand, MD & CEO, Axis AMC.

We believe that this government having been given a decisive mandate in the last general elections and given that election calendar is relatively light for the next year should embark towards clearing the huge backlog of reforms. The steps this government took over the last two years in strengthening the rural economy thorugh NREGS and the farm loan waiver is holding us in good stead. A similar bold plan needs to be implemented if we are to achieve long term sustainable, inclusive growth which is required for India to indeed benefit from the much talked about demographic dividend over the next 20 years. Given this background we would like to see this budget focus on the following: · Clear strategy to embark on a path of fiscal consolidation - The Indian economy has been rather resilient to the global crisis and will be clocking 7.5% growth for FY10. Pickup in growth will ensure buoyant tax revenues and absence of one off expenditure items would mean lower expenditure growth. It’s feasible to reduce the Expenditure/GDP growth by more than 1%. This would lead to a possible reduction of 150 to 200 bps of Fiscal Deficit. As we believe that growth will continue to be strong over the next 2 years, a meaningful reduction in the fiscal deficit is very likely. · The divestment program will play a key role towards consolidating government finances and also in keeping up the investment momentum in rural infrastructure. We expect around USD 4.5 – 5 bn from disinvestments. While it will help contain the fiscal deficit, we have also seen that as Public sector companies have been listed or government holdings diluted, these companies have become more efficient. · A key feature of the UPA government has been social and rural sector push through National Rural Employment Guarantee Act (NREGA) and we expect increased allocation towards poverty alleviation programs and social welfare schemes like education and health. We would also like to see a much larger thrust on implementation of projects announced to ensure that the larger objectives are achieved. · We would also like to see roadmap for the rollout of Goods and Services Tax and the New Direct Tax code.
While the whole world struggles with huge fiscal deficits, India has the luxury of being a high growth economy which will help fix the deficits quickly and at the same time is critical for us to reduce the number of people below the poverty line. The Panacea of many of our problems is growth and hence we must ensure we do everything to ensure long term growth.

Mr. Rajiv Anand, MD & CEO, Axis AMC.