Sensex is Low ~ Rupee is Low ~ WE ARE LOW ! ~ Inflation is High ~ Current & Fiscal Deficit is High ~ Oil Prices are High ~ FII & FDI Trust Deficit is High….and yet the Government continues to be on the defensive and keeps claiming pyrrhic victories…and after years now admit Global Macros are severely impacting us !

They say there is Intelligence leakage when Government keeps defending their inability to find sustainable Economic solutions …I disagree !…there has to be Intelligence in the first place for there to have been any leakage !….pardon me for being unkind here…but it truly is frustrating when India continues to squander it’s resources

Sensex is Low ~ Rupee is Low ~ WE ARE LOW ! ~ Inflation is High ~ Current & Fiscal Deficit is High~ Oil Prices are High….FII and FDI Trust Deficit is High…..and yet the Government continues to be on the defensive and keeps claiming pyrrhic victories of GDP Growth rates and Employment Plans and record Foodgrain Production and High Fx Reserves…and after years now admit Global Macros are severely impacting us !….and our near 80 year old  FM,addressing the Rajya Sabha at length today on the state of our Economy keeps living in the Past, referring to past History of 1948 and 1952 and late 1960s …and that another Committee may be formed to look into current Economic issues !….Good Lord ! yet Another Committee !…suddenly the FM  seems to have realised Stark Reality…talks of being pragmatic,realistic and keep eyes on the ground !….earlier there was a psychosis prevalent…ambitious PSU Disinvestment was budgeted…as were lower deficits and higher growth….none achieved….never would have been,when targeted in the first place !….repeated assurances were given as to India remains a Growth Story and not to worry

Now the Government tells us it is a worrisome and anxious economic situation that India faces….Why could they not have been Honest in the First place rather than giving false reassurances…either it was deliberate or it was a lack of vision and intelligence to realise this !

Where are the selfless Economic and Political Luminaries and Visionaries ! ?…India desperately needs you’ll now more than ever !…to bring back on Track of Economic Prosperity a derailed Economy !

Pranab’s Powerless Budget to Remain in Power !….Budget Speech is yet going on….over 1 hr 45 min….he remains standing while Sensex sinks from positive (up 100 points) to negative territory from yesterday to current 17600 levels

Pranab’s Powerless Budget to Remain in Power !….Budget Speech is yet going on….over 1 hr 45 min….he remains standing while Sensex sinks from positive (up 100 points) to negative territory from yesterday to current 17600 levels

Fill in the Blank by Choosing the correct Option

Pranab delivers a ________ less Union Budget 2012

  1. Purpose
  2. Power
  3. Rudder
  4. Spine
  5. Reform
  6. Meaning
  7. All of the above

Answer is 7….this was his 7th Budget and it came without any 7 year itch !

Update just five minutes later…..

I hour 50 minutes and Pranab ends his Budget Speech at 12.50 pm….as I had blogged yesterday I did not expect him to announce any path breaking or reformist anoouncements….I’m so sure of this mindset of a 75 + year old….Old School….Protectionist…Intend on Politicians,Parliamentarians and Bureaucrats retaining Control of Our Indian Economy which is really trying to break free to tap the great potential that India has….just look at him !….Gandhi Family Loyalty !…one more Rajiv Gandhi Scheme…this one offer Tax Breaks in Equity  to tap Retail Investors…this segment has lost serious principal in equity ! you think they would be bothered with new tax breaks !…..also retaining 51% Government Stake in PSUs while announcing a disinvestment target of Rs 30000 crs for FY 12/13…in other words Government will continue to majority own PSUs and also retain managing them and their continuing Inefficiencies !

51 % FDI in Multi Brand Retail…”Held in Abeyance”

49% FDI in Aviation….”under active consideration”

Tax Exemptions and Bands marginally enhanced

Service Tax Rate up from 10% to 12% on a more widened base

Excise Duty up from 10% to 12%

DTC should be implemented soon…no date given

GST could come in by August 2012….heard this one before !

Fiscal Deficit is 5.9% in FY 11/12 up from 4.6% from revised estimates….For FY 12/13 he has targeted 5.1%…this is high too….What if Oil Basket exceeds US $ 125 per barrel…In FY 11/12 they budgeted for US $ 90 and are facing US $ 115 !

Food Security Bill to be fully provided for ….This is Sonia Gandhi’s pet…wonder if the  announced 2% of GDP Subsidy Target can be adhered too !…also the huge incremental of Rs One Lakh Crores in Agricultural Credit outlay to a record Rs 575000 crs may sound good…but given the scammed history of government machinery in context of leakage and corruption ,I fear and I daresay,the Government has provided more Funds for misappropriation !     read more

Muted Expectations from the Union Budget….and the FM delivered on cue…..Sensex rally of 500 + Points had to reverse

Immediate Take on the Union Budget

 

Nothing much was expected from this Budget and our FM met these expectations…..I had not expected any Amnesty Scheme or bold vision or dramatic reform announcements….too many pressures and pulls and compulsions being faced by this UPA Government currently

 

Markets were however buoyant from Morning and post budget speech Sensex surged over 500 points at one time reaching 18297 prompting me to alert clients that these gains will reverse….they did by over 400 points in the last hour or so,although Sensex closed up 122 points….more a relief rally really + some short covering

 

Macro Concerns are yet intense…Interest rates…Inflation…Oil Prices….global tensions in MENA…..FM really had his hands tied

…with inflation high he had to put monies into the hands of the People…his Direct taxes sops will lose Rs 11500 crs for the Government….he is recovering these from Indirect Taxes

…..he seems to have misunderstood what we wanted for our Infants and Women !…he has reduced the Excise Duty on Diapers and Sanitary Napkins from 10% to 1% !

 

He also seems to have worked backward to put a lid on the fiscal deficit….gave a % & number to it…4.6% of GDP at 4.12 lakh crs,lower in % terms but slightly higher in absolute terms than this year, and then adjusted other heads !…for example subsidies ,especially fuel look too low at Rs 23000 + crs

….he has targeted 9% GDP Growth rate for 2011-12….looks challenging as in 2010-11 we have seen 8% + every quarter…and Corporate Earnings may be impacted next fiscal year as Interest Rates remain high

….and the Deficit will continue to be funded by strong Government Borrowings of Rs 3.43 lakh crores…with this pressure and high Inflation  expect Interest Rates to firm up some more !…they are already at 10% levels

 

Markets got an unexpected  positive in that FM announced that Foreign Nationals that meet KYC norms will be allowed to invest in Equity Schemes of SEBI registers Mutual Funds….this opens out a whole new class of investors to tap…..KYC norms would mean these Foreign nationals would require PAN numbers 

 

Direct cash Subsidies to Below Poverty Lines Indians for LPG,Kerosene and Fertilisers in a good first step to eliminate malpractices in subsidy distribution….UID is yet a year away to use as an efficient platform for financial inclusion and distribution of resources   read more

Live from the Oscars to a near Octogenarian delivering Union Budget Ointment

A new week commences as February ends…Got up early to watch Live on ‘Star Movies’ the 83rd Oscars Awards Presentation Ceremony….new and younger hosts in an attempt to make the Oscars youthful and livelier and more ‘yo’ and ‘wassup’…...James Franco and Anne Hathaway…Great Actors…not so Great Oscar Hosts…needed host of earlier years Billy Crystal and some Award Winners and Award Presenters like Sandra Bullock to pep up the evening…. Colin Firth won Best Actor in a leading Role for ‘The King’s Speech’…This superb Movie had Twelve Nominations and won Four Oscars for Best Original Screenplay,Best Director,Best Actor in a Leading Role and Best Motion Picture….The King,Colin Firth’s subtle English wit when delivering his Gratitude speech for winning stole the show and showed why the Queen’s English remains up there ! against rebelious American Slang

Now I’m hearing Live, and I must confess not to eagerly as I did in the past,to a near Octogenarian,Finance Minister Pranab Mukherjee…he’ll turn 76 this year…delivering  Ointment for our Economic Woes in his Union Budget…Tightrope Walk…Pragmatic or Populist ?…..Challenges of  Inflation,rising Oil and Food prices,Deficits, Corruption and Governance issues,Internal and External Security Concerns….let’s hear what he has to say…….  

UNION BUDGET 2010/11 AT A GLANCE

              
 
Union Budget 2010-2011  
 
   

 
 

 

     
          Budget at a Glance  
 

  (In Crore of Rupees)

 

  2008-2009 [email protected]

2009-2010 Budget Estimates

 

2009-2010 Revised Estimates

2010-2011 Budget Estimates

1.    Revenue Receipts

540259

614497

577294

682212

       2.    Tax Revenue (net to Centre)

443319

474218

465103

534094

       3.    Non-tax Revenue

96940

140279

112191

148118

4.    Capital Receipts (5+6+7)$ 

343697

406341

444253

426537

       5.    Recoveries of   Loans

6139

4225

4254

5129

       6.    Other Receipts

566

1120

25958

40000

       7.    Borrowings and other
              Liabilities*

336992

400996

414041

381408

8.    Total Receipts  (1+4)$

883956

1020838

1021547

1108749

9.    Non-plan Expenditure      

608721

695689

706371

735657

      10.   On Revenue Account  of          
              which,

559024

618834

641944

643599

      11.   Interest  Payments

192204

225511

219500

248664

      12.   On Capital Account

49697

76855

64427

92508

13.   Plan Expenditure

275235

325149

315176

373092

      14.   On Revenue Account

234774

278398

264411

315125

      15.   On Capital Account

40461

46751

50765

57967

16.   Total Expenditure (9+13)

883956

1020838

1021547

1108749

      17.   Revenue Expenditure
             (10+14)

793798

897232

906355

958724

      18.   Capital Expenditure
             (12+15)

90158

123606

115192

150025

19.   Revenue Deficit (17-1)

253539
(4.5)

282735
(4.8)

329061
(5.3)

276512
(4.0)

20.   Fiscal Deficit
       {16-(1+5+6)}

336992
(6.0)

400996
(6.8)

414041
(6.7)

381408
(5.5)

21.   Primary Deficit (20-11)

144788
(2.6)

175485
(3.0)

194541
(3.2)

132744
(1.9)

@  Actuals for 2008-09 are provisional.
$  Does not include receipts in respect of Market Stabilization Scheme.

*  Includes draw-down of Cash Balance.

Note : GDP for BE 2010-2011 has been projected at Rs.6934700 crore assuming 12.5% growth over the             advance estimates of 2009-2010 (Rs.6164178 crore) released by CSO.    

Union Budget 2010….First Reaction….So what’s New !?

Sentiment is at work at the Stock Exchanges…more visible on days such as these…when the Union Budget is announced

In the Morning the Sensex and Nifty were up marginally…as the FM began his speech at 11 am,they remained positive…90 minutes into his speech,at around 12.30 pm and around the time the BJP decided to walkout,the Indices gathered fast momentum and he Sensex rushed towards 400 points rise and  16600 while the Nifty sought over 100 points and 5000

What’s my first reaction ?….so what’s New !?…simply continuing the Fiscal and Infrastructure Road Map

  • You don’t need a Visionary…any FM or a layman can do this…. to sell yours assets to part fund your fiscal deficit…Rs 25000 crs is the Disinvestment for 2009/10 and Rs 40000 crs for 2010/11…..to reduce pressures on the Government Borrowings…Borrowings has already crossed Rs 4 lakh crs in 2009/10…Government plans a lower Rs 3.45 lakh crs in 2010/11 !….My sense is that this figure may be revised upwards if Oil again crosses US $ 100 or if  Disinvestment Figures don’t work out 
  • Fiscal Deficit is pegged at Rs 381408 crs or a lower 5.5% of GDP for 2010/11…Inclusive of Oil and Fertiliser Bonds,In 2008/9 it was 7.8% of GDP and in 2009/10 it’s going to be 6.9% of GDP
  • Total Expenditure for FY 2010/11 has been upped 8.6% at 1108749 crs of which Plan Expenditure is up by 15% to Rs 373092 crs  and Non Plan Expenditure is up b y 6% to Rs 735657 crs
  • All Media Stock Channels are excited over the increase in the Direct tax Slabs Range…so what’s new..this was already announced much earlier what the New Slabs would be from April 1,2010…it’s already on wikipedia…check it out
  • DTC and GST are already scheduled for being implemented by April 1,2011…The FM only hopes he can be able to do this
  • GDP Growth rate is 7.2% this year,may be revised upwards…FM wants to return to the high 9% rates…This is expected  to help reduce the pressures of funding fiscal deficits through borrowing,asset sales and deficit financing…but depending on this can throw you for a Toss if twin challenges of Food Inflation amd Potential Oil Price Surges play up the squeeze…check out a few days old Blog on this
  • read more