FM takes industry reforms out of budget's purview

Commenting on the stock market’s negative reaction to the Union Budget, Finance Minister Pranab Mukherjee has said the market may have expected too much from the country’s annual financial document. Mukherjee said a lot of expectation had built up in the last one month — "the budget can give a broad vision of what we intend to do, and we did that," he said — and that the buget was not the only instrument to address economic issues.

The stock markets slipped sharply just as the finance minister progressed into his budget speech in Parliament on Monday and was 5% down, mainly due to the lack of any major announcements.

“I had at the start of my speech said ‘One budget speech won’t address all the problems [that the economy faces],” Mukherjee said in an interview to Lok Sabha TV, adding that the budget was not the only instrument to address the economy’s issues.

When asked why there were no marquee announcements in the budget on major issues like divestment, Mukherjee pointed out that he had given a policy statement. “I have given the philosophy of the [dis]investment,” he said. “As and when it will take place — perhaps the market expected I would make any announcement on that, it is not possible. No finance minister can say I will disinvest in this or that company.”

The minister, however, pointed to the positive announcements that the budget had: scrapping of the fringe benefit tax (FBT), extension of sunset clause in income tax schemes to help exporters, etc.

On the country’s deteriorating fiscal deficit situation — the finance minister raised the FY10 fiscal deficit estimate to 6.8% from 6.2% earlier — Mukherjee said it was possible to improve the fiscal deficit target in the next budget. Mukherjee added that he was hopeful of achieving 7% gross domestic product (GDP) growth of 7% in the fiscal year.

Read: The entire transcript