Friday, February 19, 2010

Estimate the fiscal deficit to be 5.7% of GDP

Budget 2010-11 Preview

 

Fiscal balances – deciding factor


q                  We do not expect the forthcoming Union Budget 2011 to dish out any big bang reforms/measures for India Inc

q                  We believe that THE MOST IMPORTANT THING to look for in the forthcoming Union Budget 2011 will be the FISCAL DEFICIT and the GOVERNMENT BORROWING PROGRAM

q                  We estimate the fiscal deficit to be at Rs3.9tn/US$85bn (5.7% of GDP) for FY11. We believe that high fiscal deficit will continue to bring pressure on the G-Sec yields and the market valuations too

q                  We believe that there would be only partial roll back of the excise duties cut in stimulus budget, though a roll back of service tax looks very likely

q                  Pressure points to budget may arise from inability to disinvest PSUs and subsidies. Food and petroleum subsidies may pose serious problems for the government finances

q                  As usual, we are expecting the expenditure to continue on plans, especially infrastructure including transport and urabn infra, energy and health

q                  Hence, some winners of the budget would be infrastructure companies

q                  The banking and financial services companies may turn out to be losers if the fiscal deficit is higher than expected

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The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
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