 FM is a 'smart CFO': Chanda KoccharPublished on Sat, Feb 27, 2010 at 12:13 | Source : CNBC-TV18 Updated at Tue, Mar 02, 2010 at 08:55 120621 Investors following ICICI Bank. Share this News with them.
The market got a boost on the back of a positive Budget. After remaining in the red for major part of last week, the Sensex shot up 300 points in yesterday (February 26)'s trade. While most market experts believed that FM Pranab Mukherjee presented an extremely balanced Budget 2010-11, a few considered the efforts extremely unimpressive. Not only has the FM cut the fiscal deficit to 5.5% in the coming year, but has promised to cut the deficit to 4.8% in FY12 and to 4.1% in FY13. To achieve this, he has expectedly rolled back the fiscal stimulus by a bit, by raising excise duties from 8% to 10%. Also, the minimum alternate tax (MAT) has gone up to 18% from 15%. Corporates, however, got some relief from the cut in surcharge on tax. So are the targets for FY11 too aggressive? In an exclusive interview with CNBC-TV18, a panel of market and industry experts, including Chanda Kochhar, Managing Director and Chief Executive Officer of ICICI Bank ; Bharat Doshi, Executive Director and Group Chief Financial Officer of Mahindra & Mahindra (M&M); Sumant Sinha, Chief Operating Officer of Suzlon Energy and Ashok Wadhwa, Group Chief Executive Officer of Ambit, present their broad views on the economy as well as the capital markets. Also Read: Union Budget 2010-11: Highlights Budget 2010 fine print: Assessing FM's tax agenda Industry stalwarts decode Budget 2010 Budget 2010: Impact on your wallet Budget 2010-11: Not a game changer, says Vibhav Kapoor Here is a verbatim transcript of the exclusive interview on CNBC-TV18. Also watch the accompanying video. Q: All the numbers that you have seen, a fiscal deficit number for 5.5% for FY11 and then subsequently lower numbers, lower borrowing than expected at Rs 3-4-5 lakh crore, what does this mean for the operating environment for interest rates and how as a bank are you planning the next few months taking into account the government borrowing etc?
Q: Within what range are you estimating the bond rates? Kochhar: I would still think that it is between 7.75 to 8.25 and how they would move month-on-month would depend on what the demand and supply is during that period but beyond that if you talk of lending rates or deposit rates, they get governed more by the demand and supply of credit in the country and not only on account of the bonds which we will have to see how the credit pick-up takes place next year and the interest rates would move on that basis. Q: Do you have any comments on this attempt towards fiscal consolidation?
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Finance Minister Pranab Mukherjee announced a fiscally conservative and largely no-shocks middle-of-the-road Budget
Doshi: First of all one must commend him for trying for 5.5% for next year and to lay down a path forward. A concern is-let us hope it proves wrong-has he been too adventurous in his assumptions on arriving at the fiscal deficit and if he has then we have a problem because then the market borrowing which he has assumed will go wrong. Then, he has already taken Rs 40,000 crore in the disinvestment plan. So how much more room there is to reduce that would be a question.
