[Investors Please Listen] Budget 2009-10 ; Short on expectations : Emkay Research

Budget 2009-10

Short on expectations

n                                                      The Union Budget shows a reciprocation of the UPA to its vote banks.  Budget outlays increased by Rs260bn over interim budget. Beneficiaries are: infrastructure, agriculture, education and rural development.

n                                                      Major concern is the increased fiscal deficit to 6.8% against 5.5% declared in the interim budget.

n                                                      The budget also failed to give any clear roadmap on major reforms with confidence

n                                                      Some positives like adhering to the GST deadline of 1st April, 2010 and abolition of FBT are  welcome moves. No rollback of excise could be taken as positive.

n                                                      More money at the disposal of an individual a) post the abolition of surcharge and education cess and b) due to some relief on increased threshold limit for personal income-tax.

n                                                      However, the budget is short on market expectations with no specific announcement on FDIs, no specific details on divestment and some disappointments on incentives to the housing sector. 

n                                                      Increase in rates of MAT from 10% to 15% will reduce the profitability of Corporate India

n                                                      Fiscal deficit could move above 6.8% if the government's  socialistic drive continues and there is a delay in economic recovery.

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