The Banking and Strategy Initiative

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More Wisdom from the Indian Polity | Kaushik Basu

Kaushik Basu has actually gotten away with quite a lot and established a pretty useful charter for the next 4 years with this Budget for 2009-10, none of the limitations of the US Financial statements seem to be applying despite the pressures of pro poor politics and wasteful public expenditure as the excuses for the decade to be and the decade gone by still acting as appropriate nettle stalks in the grass…

While Democrat state governments pay with minor ruses turning into full-blown scandals, the bankrupt states are finally out of the media eye as the December 2009 GDP growth figures of 5.5% become a new benchmark for statistics to prove/bely in 2010. In the same light, India turns into a Swadeshi and pro woman’s battleground with a reform budget in place. And there I can see a few Kaushik Basu monos from his personal dirty tricks department. Being his first document as Pranab’s shadow, his own security is very short-lived and he better put money where the mouth is..

Firstly, while everyone knows that we had bad experiences with VDIS and Gold Bonds, The governments proposals to rejuvenate collections with improving the tax net have defaulted to activating the defunct Settlement Commission. Secondly, the nutrient based subsidy programs are a non starter and nothing has been attempted to even start the transformation required to make it useful. Despite 25K crores or $6bn in Oil bonds, the gross subsidy bill keeps on increasing. However, the totals for borrowing and the deficit show that except for the INR 1T made available from previous program’s one time expenses in salaries and farmers loans, not much has been changed on the expenses side. And where credit is due, we have all noted the great reinforcement for Infrastructure, Education and even Health compared to previous governments..So, if in the next 12 months Kaushik Basu cannot show anything for his shenanigans, Pranab da will surely get away much easier.

Lower Revenue Receipts will definitely not be helped in this year as the new Direct Tax Code is awaited..thas also GST implementation and sharing raising much doubts for the planned and penned down deficit targets. As long as such hawkish budget reviews continue it is obvious that not much more will be achieved by investing in this market either, and thus analysts stay away from belling this Dino-Kaw. However, our fiscal performance is likely to suffer and not much showing in the new inflation, IIP or GDP numbers for the India story to sell any better than the last 20 years..10% GDP growth..likely 14% but if inflation is above 15% we would have actually lost growth.

However, we believe this was a great opportunity to get to infrastructure and social implementations with as simple benchmarks as invented for Security and Justice Programs and even the subject matter of the Thirteenth Finance Commission..Apart from that we have also missed a chance to bell the RE cat substantially and even with RTI and established program history left public and investors in the dark about rural employment and economic welfare programs. Unfortunately our access to detailed situation on the country side also needs to be improved for us to even gallop like civilized horses, let alone saunter away the recession munching grass like Cattle.

Some Key Features the top line summary missed

To help analysts scything thru the long list of Customs exemptions and the Cashless attempts at Power, Financial Inclusion and Clean Energy, and even 10 lakh skilled manpower in 10 years for a grand sum of INR45 Crores($11MM), I can empathise, sympathise and verbalise just the fact that these have never stopped us from growing in the private sector and generating business before.

Especially with the tax code now cleared and the social infrastructure spending bill of INR 1.38 T with $10 bn in Infrastructure construction ( Bharat Nirman = “Building India”) nd the $12bn for Rural Employment Guarantees we have what we can get from a government. Credit support obviously runs much more than the $90bn+ promised.

I also significantly liked the idea of a District level Health Census. As alluded to above, that s where the government can help us access the rural world and get accurate data points Also great is the final affirmation on India Infrastructure Finance and IDFC.

Price rise by industry has been met optimistically by retail investors but the sales numbers will start coming in April 2010. That growth then will underline most market movements and targets for 2010

FDI limits in retail and bancassurance/ insurance sectors are also eagerly looked forward to as the government consolidates Para 4, SEA FIPB and other regulations for FDI and ECB into one handy-dandy notebook..

May I recommend personal attention for some captains of Industry like Anil Ambani, Sunil Mittal and a selected few, to see government in action than in whittled statements and insane public arguments with the politically disposed and pretty well displaced class of BJP and the chairists from CPM

Industry Impact

Inflation to keep growing till June, Petroleum situation tougher to manage, marginal increase in prices and addl service tax to bring in better realisation and measurement of healthcare and housing implementation


This entry was posted on March 5, 2010 by in Financial Markets, India, India Infrastructure, O'nomics, Retail Lifestyle and tagged , , , .


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