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Budget failed to show any fiscal prudence: experts |
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| Economists and experts today said the Union Budget presented by Finance Minister Pranab Mukherjee on Monday has not shown any fiscal prudence. They were speaking at a post budget analysis session organised by the Confederation of Indian Industry (CII) here in Ahmedabad. Read |
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Counter-productive stimulus? |
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| The only explanation for the broad calculation underlying the Budget is that the government is more nervous about the state of the economy than it lets on. A fiscal deficit of 6.8 per cent of GDP, up from 5.5 per cent postulated in February’s Interim Budget, means an additional stimulus of nearly Rs 80,000 crore. No government, already saddled with a big public debt overhang, undertakes such spending unless it feels compelled by the circumstances. Read |
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Suman Bery: A Budget for consumption |
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| "Buy on the rumour, sell on the news” seems to me the best explanation of the stock market’s swoon during and after the finance minister’s Budget speech yesterday. It was a reaction which surprised me at the time and continues to do so. Read |
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Akash Prakash: A disappointment |
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| The markets have reacted to the Budget with a sense of unease and disappointment. Maybe expectations were unrealistic, and we are unfair in expecting so much in the short period of time the FM had to prepare and present the Budget. Read |
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Surjit S Bhalla: Beginning of the end of C3? |
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| It is relevant to understand the background to Budget 2009/10. Hope and despair is how I would describe it. Hope because the government finally had a political mandate, a vote much beyond its own optimistic expectations. “No more excuses” was the Congress’s future. One would now know for sure whether the Communists within the Congress party really held sway over policy decisions. Read |
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Mukesh Butani: A delicate balancing act! |
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| Well, as expected, with lurking scepticism and caution, the first full Budget of the new government was a deft balancing act for broad-basing sustained economic growth, rather than a ‘big bang’ announcement for a fresh stimulus package and tax concessions. Read |
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Encouraging provisions |
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| The Budget has been, on the whole, very encouraging. It has, by virtue of its various provisions, and has effectively increased the purchasing power in the hands of the people which would definitely be a positive factor for conspicuous consumption.The abolition of excise on branded jewellery will result in higher margins as the cost was absorbed by us since the branded jewellery was sold at fixed MRP on a pan-India basis. Read |
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Minimum wage welcome |
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| The budget announcement of a minimum wage of Rs 100 in the National Rural Employment Guarantee Scheme (NREGS) is welcome provided it is a minimum and not a maximum wage. Rajasthan, for instance, has been giving Rs 100 for two years and Haryana pays more. So the Centre should not give these states funds to suffice payment of Rs 100 rates. The Congress manifesto in the last election had said that the minimum NREGS wages would be linked to the consumer price index. Read |
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Conservative approach |
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| The budget represented continuity rather than radical rupture from the past. If continuity disappointed the markets, that was in part substantive (the lack of radical policy reforms in the budget), and in part a matter of high expectations created by the election victory of the Congress. Read |
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Short on expectations |
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| With several question marks about the tax revenues of the government, it was difficult to imagine a bigger social sector spending over last year. The finance minister did announce with gusto a 144 per cent increase of expenditure on NREGS over the 2008-09 allocation of 14,400 crore, but, in fact, the revised estimates for NREGS in 2008-09 were already at Rs 30,000 crore and the 2009-10 Budget adds Rs 9,000 crore to it, which is about 33 per cent increase arising out of legal obligations of the Act and projected demand. Read |
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Growing complacent |
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| On the expenditure front, the Congress-led government seems to be growing complacent about its Budgetary policies for social sectors. While the Budget does pay attention to some of the important sectors, like rural and urban infrastructure, rural livelihood, farmers’ debt and university and technical education, it fails to pay adequate attention to problems in social sectors. Read |
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Mere talk will not do |
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| Despite the bold talk about innovations in the governance and service delivery system, this Budget hardly takes a step in ‘walking the talk’. In the areas of education and health particularly, the failure to think out of the box is simply disastrous for a young country. A wealth of new ideas like vouchers for education, health and food security have been discussed, some of which have already been piloted either by the government or by think-tanks. Read |
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'The market expected too much' |
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| You say there will be disinvestment, but the Budget document has only accounted for only Rs 1,100 crore from this. Read |
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Huge push for consumption |
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| This Union Budget was riding high on expectations, signalling reforms — a cue from Economic Survey, active steps on disinvestment and realistic expectations of government revenues, both tax and non-tax. Of this list, the government has largely met expectations with respect to tax collections, remaining relatively muted on the other two! From a markets perspective, the Budget has ‘under-delivered’ on the ‘implementation-intent ratio’. Read |
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Signalling reform |
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| The government has used the Budget as a vehicle to signal its commitment to economic reform on oil price deregulation, the introduction of a goods and services tax from April 2010 and fiscal consolidation. However, with no clear-cut roadmap for disinvestment and price deregulation, the market has been disappointed. Read |
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Disappointment for Bihar |
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| Before commenting on national issues, one is amazed to notice that the Budget does not address the development needs of Bihar even marginally. In contrast to the attention paid to West Bengal for Aila (Rs 1,000 crore) or even rich Delhi for the Commonwealth Games and Chandigarh, Bihar's necessities are wholly ignored. Read |
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Best in most difficult times |
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| Andhra Pradesh Chief Minister Y S Rajasekhara Reddy termed the Budget as the “best in the most difficult times”. Hailing the Budget as farmer-friendly, he said it would greatly benefit the state. Read |
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No bold steps |
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| I had spent 150 minutes with Finance Minister Pranab Mukherjee in a pre-Budget consultation meeting. After seeing his Budget, I feel I had wasted my time. This Budget seems to me a mere extension of his Interim Budget, with no bold steps. Read |
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Tv Bytes |
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| The Fringe Benefit Tax abolition is a huge thing for me. Read |
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Analysts' View: Raamdeo Agrawal |
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| The finance minister (FM) has done a good job to maintain an aggregate demand in a recessionary situation by increasing rural spending and giving some reprieve in income tax by cutting the surcharge. It’s a fairly balanced Budget. The fall in markets is an over-reaction as the finance minister has never said that there would not be any divestment. Instead, he has hinted that nearly Rs 25,000 crore is likely to be raised through divestment. Read |
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Analysts' View: Deepak Sawhney |
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| Overall, the Budget announcements are modest and neutral. The fall in stock markets was a knee-jerk reaction as most market players felt that the government fell short of expectations with regard to setting a clear road map for foreign direct investment (FDI), insurance and pension reforms and divestment of PSUs. Read |
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Analysts' View: Anand Rathi |
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| A sheer knee-jerk reaction by stock markets today. The Budget has been fair without any negative surprises except for minimum alternate tax (MAT). But, that too was compensated by the removal of fringe benefit tax (FBT). The Budget has increased rural spending and cut tax surcharge, something that will keep the growth engine well-oiled. Although there was no announcement with regard to divestment of PSUs, definite moves in this direction would be announced soon. Going forward, managing fiscal deficit will be the key for the government. Read |
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Not bold enough |
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| While the measures announced in the Budget show that the finance minister (FM) is open to suggestions -- he removed commodity transaction tax (CTT), fringe benefit tax (FBT) and so on -- this annual exercise has failed to reveal the boldness that was expected. Recent statements from government functionaries had raised hopes that the Budget would spell out a road map and not just be a balance sheet. This has not happened. For instance, there is a proposal for raising Rs 1,100 crore through disinvestment but this does not indicate the potential. Read |
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Tinkerer's Budget |
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| The Budget has attempted to address infrastructure investment and consumption-driven growth in a difficult economic environment and must be seen in the context of the three challenges and priorities listed by the finance minster — Lead the economy back to a high GDP growth of 9 per cent at the earliest; deepen and broaden the agenda for inclusive development; and re-energise the government and improve delivery mechanisms. Read |
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An aam aadmi Budget |
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| The market was euphoric as it expected many reforms from the Budget. The Budget has pragmatically projected a slowing revenue growth and stressed the need for spending money on supporting the economy. It is clearly an aam aadmi Budget that has tried to put money in the hands of the consumer by increasing spending and cutting taxes. On the positive side, the abolition of fringe benefit tax (FBT) and surcharge on the income tax will help the aam admi. Introduction of GST by April 1, 2010 will also help in blocking the tax leakage and reducing regulatory arbitrage between unorganised and organised sectors. Read |
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Need a bigger push |
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| THERE WERE NO big moves for the pharma sector but some of the announcements made were interesting. Increased government spending on healthcare is bound to have an impact in more ways than one. The reduction in customs duty on life-saving drugs and devices is a welcome move as it will improve affordability. Read |
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Test-match innings |
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| THIS IS NOT a 20-20 knock from the Finance Minister. Rather, Pranab Mukherjee has played a well-crafted Test match innings. The removal of the Fringe Benefit Tax is good news for the corporate sector. Several policy initiatives, including major tax reforms, have been unveiled. Overall, the Budget is clearly an expenditure-driven one, given the need to provide a push to economic growth and consumption. Read |
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Stimulating growth |
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| Some of the provisions in terms of fiscal stimuli were good such as urban renewal, government spending, rural development, social sectors. It is also a positive that the excise duties and service tax have not been touched. The removal of surcharge on personal income tax was highly stimulating. Read |
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Balanced budget |
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| It’s a very balanced budget and for the long-term. The finance minister has covered a wide spectrum of things, which were long overdue-like health and education. He has provided a lot for the rural sector, which will come back to the manufacturing industries. Read |
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Winning proposition |
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| The key theme for the Union Budget is clearly sustainable growth. The Budget provides significant direction towards “inclusive growth”, addressing bottlenecks that impede investment and focusing on infrastructure and the farm and rural sector as growth accelerators for crystallising 4 per cent agriculture and 9 per cent industry growth. Read |
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Growth-oriented budget |
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| The Finance Minister is to be complimented for presenting a growth-oriented budget, which is not only pragmatic, but recognizes the need to provide the required impetus to the GDP growth, which was lower at 6.7 per cent in 2008-09 and is estimated at 7 per cent in current year. The intention to sustain 9 per cent GDP growth in future is highly welcome. The fact that the Finance Minister wishes to push up investments in infrastructure to 9 per cent of GDP by 2014 is very gratifying and would really accelerate the whole process of economic growth. Read |
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Achieving the manageable |
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| A finance minister in any country across the world needs to reconcile the variable demands of vested interests. Presenting a Union Budget in the current economic environment was always going to be a tough balancing act for any finance minister. Expectedly, the Budget focused mainly on the poor with promises of additional infrastructure spending. Read |
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Pragmatic outlook |
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| The Union Budget for the current fiscal year is a pragmatic and honest budget. The increased allocation to physical infrastructure is a step in the right direction. The government has also incentivised the banking system to lend more to the infrastructure sector by providing 60 per cent refinancing of commercial bank loans through IIFCL over the next one and a half years. The Budget also aims to administer some stimulus by shoring up private consumption. Read |
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Towards a sustained, inclusive growth |
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| There is no quick solution to India’s challenges and, as Finance Minister Pranab Mukherjee said, one budget would not do it. Consequently, the new government has focused on sustained growth while defending the economy against the global crisis, albeit at the cost of fiscal consolidation. Read |
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Spending will increase |
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| The Budget can be referred to as the “vision document” as it focused on rural, agrarian and social sectors, which will create a huge demand for goods and services for India Inc. He has drafted the roadmap to achieve the target of 9 per cent GDP. The enhanced emphasis on infrastructure projects shows the determination of the government to boost domestic demand. This will further incentivise other industries in the medium-term. Read |
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Lacks depth to reform |
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| The Budget presented by the finance minister today was a workman-like effort rather than an overarching one. At a broader level, it seeks to continue the UPA’s economic philosophy of generating growth by distributing funds at the grassroot levels and letting the demand filter up, rather than being top down. Read |
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Good for commodities |
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| The Budget announcement is visionary and good for the commodity markets, for which the government should be applauded with highest intensity. It will stimulate huge investment in the warehousing sector since the uncertainty of commodity market viability with respect to the cost of transaction (CTT) has been removed and now it will be at par with top 25 global commodities exchanges which constitute 99.99 per cent of the world’s exchange traded commodity derivative volume. Read |
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An understated Budget |
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| In some ways, this is an understated Budget — it delivers more than it apparently does. Nine per cent growth is a big theme, but somehow the markets got lost into details and didn’t read this bold picture. Read |
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Long-term in mind |
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| The presentation of Budget 2009-10 has been particularly challenging for the finance minister. The markets seemed to have anticipated some big-bang measures on economic reforms, foreign direct investment and disinvestments. The finance minister has redeemed himself well on all these expectations by rightly stating that a single Budget speech cannot solve all problems, nor is the Union Budget the only instrument to do so. Read |
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Most wishes granted |
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| Given the statesman that he is, the finance minister has done a fine balancing act in today's Budget. On the one hand, he has a fiscal deficit that's projected to grow at 6.8 per cent of GDP by 2010. He has to balance this with the interests of consumers by not taking measures that would cause consumer prices to rise. Read |
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Constrained by fiscal deficit |
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| Industry and markets, which wanted more, didn't realise that the fiscal deficit at 6.8 per cent is a very major constraint and it has tied the hands of the finance minister. With a total expenditure plan of more than Rs 10 lakh crore primarily allotted to highways and social sectors, a lot of support for industry will come. Read |
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Not well insured |
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| While no finance minister can propose a "please all" budget, the current proposals have a mix of good and bad. The scrapping of FBT is in right direction. The tax structure, which has been left unchanged, is also understandable. Read |
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Positive moves |
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| The financial sector in the words of the finance minister is the “lifeblood of any economy”. The Budget has put more money in the hands of individuals by increasing the personal income tax exemption limit, removing 10 per cent surcharge on personal income tax and removing FBT. Surcharge on personal income tax and FBT contributed about Rs 11,500 crore in FY09 and the removal will enhance individual disposable income. Read |
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Inclusive Budget |
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| I welcome this pro-growth and inclusive Budget as an important milestone in restoring India on the 9 per cent growth path over time. Indian economy has performed well, especially given the backdrop of the global turmoil, as it continues to build on the strength of domestic consumption. Read |
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My Budget: Dr Ramakanta Panda, MD, Asian Heart Institute |
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| It’s a social reform mandate aimed at growth, may be a sign of a more inclusive India. Read |
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M Govinda Rao: Balancing growth and stability |
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| The Union Budget for 2009-10 presented by the finance minister is on predictable lines. Surely, the finance minister has done a fine balancing act of giving a thrust to growth while trying to contain fiscal imbalance. The fiscal deficit relative to GDP is estimated at 6.8 per cent and the revenue deficit at 4.8 per cent. Read |
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Web Excl: Restoration of tax breaks on natural gas output |
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| Section 80-IB (9) of the Income Tax Act, 1961 (‘Act’) provides for a tax holiday to an undertaking engaged in commercial production of mineral oil or refining of mineral oil. Tax holiday is available for a period of 7 consecutive tax years, starting from the year in which the undertaking begins commercial production or refining of mineral oil. Read |
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Subir Gokarn: Caution over aggression |
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| The Economic Survey for 2008-09, published last week, raised my hopes that the finance minister would take full advantage of the opportunity offered to him to lay out an ambitious reform roadmap over the next five years. The one message that I took from the Survey was that the new UPA government was open to even some of the more radical reform ideas that have been floating around for a while, but never seemed to make it past the political filters. Read |
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17021.85
Budget Hightlights
