Budget Reactions: No fire power, FM spoke nothing crucial, says Geojit BNP

By Gaurang Shah, Assistant Vice President of Geojit BNP Paribs Financial Services

A well balancing act by the finance minister & playing it safe. The Budget lacks the roadmap of controlling fiscal consolidation & big bang reforms. Fuel, food & fertilizer subsidies have not been cut nor there is a roadmap on the same to bring it down in the future. Marginal tax benefit is given to the individual but the increase in service tax/excise duty/customs duty etc is going to put additional burden on the common man its the same thing again give a bit & get back a large chunk.

Year after year it becomes more & more clear that the budget is just a one day event for the equity markets & nothing more though this time there was some positive news in terms of STT cut but very little to cheer about.

The possibility of a interest rate cut by the RBI post the budget also looks to be on the lower side as fiscal consolidation has not been given priority.The figure on fiscal deficit came in higher then the estimate.The rational to increase indirect taxes & up the government collection could be because of the inability to achieve the disinvestment targets & the entire process going out of the window.The reason why this was not a populist can not be the reason for the markets to cheer as it did lack any fire power to be a reformist one this could derail the FII flows into Indian equity markets for some time,on the other side we have visible recovery in the US which can divert the FII flows from EM to DM.

There was a casual mention to bring in a white paper (without any time frame) to bring in the black money but nothing more then that.A more serious approach to this can solve the big revenue problem for the government.Will have to wait & see what is this white paper is all about & the most important, will it have teeth to bite? & how soon

You can call it a realistic budget but when you have to think futuristic your thoughts need to be more proactive & ahead of time.

Increase in customs duty on gold will not help much in the long run & it can lead to unethical activities & will not curb demand.It is important to see if the government is able to achieve lower fiscal deficit in the next budget given the fact that we are depended on crude imports & the international crude prices are no were near the comfort zone,on the flip side we have a week rupee vs the dollar.These outside factors will be very crucial going forward.

The has been some positives in the budget but nothing significant to speak about, at the end of the day be prepared to pay more for daily essential goods & services..... save less........& for equity market investors its time to investment on corrections,as we will go back to chasing & tracking the local & global news flow.