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India – Economic Environment and Direction | Advantage Research

Budget Review and Summary – 1/5

Pranab’s  Speech and Explanatory Memorandum ( Full copy at Indiabudget web ) has been used as basis with in-line analysis and enhancements from the economic news leaks by the ministers in the pre release theater.  As already published, the key features of the budget and the overall direction are available here

  • From the Economic Survey ‘s  presentation on the 26th, Economy grew at 6.1% in Q1, and 7.9 % in Q2, GoI expects the Q3 and Q4 estimates at 6.8% and 7.2% >> we expect growth closer to 07% and 8.5%
  • Negative growth in the agricultural sector is likely being thrown up as a recurrent phenomena for the markets to lower expectations.  The rest of the budget also focuses
  • PMI modifications from April 2010 will come about in the Industry basis the new IIP composite including mobile phone production and laptops, computers and a large group of chemicals and pharmaceuticals not included in the NIC 1987 classification, reducing the weightage for food products as per the new NIC 2004 and with the move of the base year from 1993-94 to 2004-05
  • IIP being reported for 20% + growth for the comparable reported 16.8% of December 2009 and muting of distortion from invalid items like alarm clocks and typewriters(courtesy ET)
  • The Food Inflation thru 2009 along with Fuel Price Increases (Post budget 5% increase) A Food Security Act is planned in the next few months to further control this inflation apart from any promises in this budget
  • The performance of the Economic and Fiscal Stimulus thru supply of disposable personal income in rural development  and infrastructure programs and the recommendation of the Thirteenth Finance Commission is cited for the withdrawal of stimulus and gradual exit over two years
  • Tax Reforms including the Direct Tax Code and the introduction of GST have been committed to April 01, 2011
  • Further Divestment will net INR 40,000 Crores in FY11 (2010-11)
  • There was lip srvice to Expenditure management and targeting subsidies but not taken up in the 2nd budget of the Congress government because of state elections and discomfort with planning policy changes. that the same will entail.

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This entry was posted on March 2, 2010 by in India and tagged , .

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