Recommendations good but market eyes delivery in Budget

Published on Thu, Jul 02, 2009 at 13:08 | Updated at Thu, Jul 02, 2009 at 16:52 | Source : CNBC-TV18

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Finance Minister Pranab Mukherjee unveiled in Parliament the government’s Economic Survey 2008-2009. The economic survey is high on reforms and divestment and was met with two reactions from most: one of being high on promise but also, at the same time, being a little too good to be actually delivered.

Also read: Eco Survey '09: Unshackled govt unveils reforms 2.0

“The objectives of the economic survey are laudable but God is in the details,” market veteran Ramesh Damani, Member of the BSE, said. “The equity market remains focused on July 6, the date of the budget.”

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Even as the government came out with the survey recommendations, the stock market chose not to pick up positive cues and largely remained choppy throughout the day.

Anand Tandon of Brics Securities said, “The economic survey has put out a wish list which is fairly attractive but it is perhaps too attractive to be true.” He said that the resources of the government would not permit them to do all of this in advance. However, he added, this is the direction in which the government wants to go and I think you could look at some euphoria that may prevail in the markets even if some parts of these can come through.”

The Economic Survey does say that it want to cut oil, fertilizer and food subsidy leakages and provide fertiliser subsidiary directly to the farmer.

Commenting on the fertilizer industry SP Tulsian of sptulsian.com said he does not believe the fertiliser producer would stand to gain as there are too many leakages. “The amount which has been provided or spent by the government has not been reaching to the companies.”

“If they can control this, if they can pay directly to the consumer, I think the subsidy burden of the exchequer will get reduced but no companies will stand to gain from this move.”

On the recommended decontrolling of the sugar industry, Tulsian said he does not see the need to decontrol of sugar at this stage. “You have free rights given to the mills for selling sugar, there is constitutional validity of state advised price (SAP) which has been upheld by the Supreme Court (SC) and so there is no dispute about that. We cannot change the constitution of India. Fertiliser is very much within the government’s control but it is wrong to say that sugar is a controlled industry.”