Motilal Oswal
Chairman, Motilal Oswal
The Budget was approached with two challenges, one the high 6.8 per cent fiscal deficit and second, the impact that any withdrawal of the economic stimulus would have on growth. Curtailing the fiscal deficit is very well addressed, as the fiscal deficit is slated to come down to 5.5 per cent of GDP in 2010-11 and further to 4.8 per cent and 4.1 per cent in the following years. Net borrowing of the government is also pegged at Rs 3,45,010 crore as against an expectation of Rs 4,50,000 crore. Hence, the dual fears of rise in interest rate as well as inflation are controlled to a greater extent. There is no cutback in planned and non-planned expenditure. Divestment would bring in Rs 40,000 crore.
Kevin Watts
Country Executive, India, Bank of America Merrill Lynch
The Union Budget 2010 supports our view that India’s fiscal risks are overdone. It is true that the fiscal deficit would still be relatively high at 5.5 per cent of GDP, albeit lower than last year’s 6.9 per cent. At the same time, viewed in the context of relatively high 8 per cent growth, we think India has a far better chance of growing out of its fiscal problems than many other countries. We applaud Finance Minister Pranab Mukherjee’s broad vision of high growth, inclusive growth and improving governance. We think the Union Budget supports growth through direct tax cuts, without compromising on the overall fiscal position, and stepping up support for rural development and infrastructure. The government’s backing to the rural job guarantee programme is also emerging as a key support for inclusive growth.
Madhavi Puri Buch
MD, ICICI Securities
The Budget reflects "Confidence and Clarity". Confidence in the ability of the Indian economy to aspire to double-digit growth and the ability of the government to contain the fiscal deficit. Clarity on the priorities of the government: Infrastructure and the rural economy. Infrastructure will include not just conventional power but also renewable energy, not just roads and ports but also social infrastructure. The rural economy will see momentum on account of increased allocation to social schemes, access to farm credit and rural infrastructure.
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Rashesh Shah
Chairman, Edelweiss
First Sachin Tendulkar and now the finance minister; this seems to be a week for veterans to dazzle us with their deft footwork.
The FM had an unenviable task in front of him, as he and his team must have sat down to draft the Budget proposals. He had to consolidate the growth momentum, rein in the fiscal deficit, improve the climate for investment and spending and to do all this while keeping a keen eye on inflationary pressures. On all these fronts, his performance has been virtuoso.
On the macro-economic front, the broad numbers look very positive – a fiscal deficit of about 5.5 per cent and targeted deficits of 4.8 per cent in 2011-12 and 4.1 per cent in 2012-13 are extremely positive signs. That he has managed to limit government borrowings to Rs 3.45 lakh crore is also positive. The market was expecting this to be somewhere around Rs 4 lakh crore. The reduced number leaves enough headroom for private sector borrowings. An increase of 15 per cent for Plan expenditure, while non-Plan expenditure has grown by only 6 per cent, is another positive.
Prabhat Awasthi
MD & Head of Research, Nomura India
The headline conclusion from the FY11 Budget is that the finance minster has achieved fiscal consolidation with a very minimal rollback of stimulus measures announced in the wake of the credit crisis. If anything, the partial minor rollback of excise duties/Customs and extra cess on petrol diesel has been partly given away in personal income tax cuts. The fundamental issue with the Budget is that it continues to stoke consumption through direct injection in consumer incomes via tax cuts. In an demand-driven/supply-constrained inflationary environment, the Budget would lead to further pressures on demand. Most likely, this will end up increasing the burden on the monetary policy later on. Overall, the Budget has projected significant fiscal consolidation.