Budget 2012: Mkt has all levers to provide healthy returns, says Angel

By Dinesh Thakkar, chairman & MD, Angel Broking

As expected, Union Budget 2012-13 delivered on the growth as well as the fiscal deficit fronts by making a credible commitment towards fiscal discipline, without compromising on the growth outlook. Moreover, the government has shown its resolve to implement reforms in taxation (DTC and GST) and FDI, which are the pillars on which economic growth will cross 8% levels. In fact, the GST is expected to be implemented by August 2012. Thus, the budget achieves the goal of maintaining its short-term prudent growth along with keeping long-term growth prospects intact. The key concern, which the Indian economy is straddled with, is fiscal deficit of around 5.9% in FY2012, which has grown in recent years.

However, FY2012 budget performance came on the backdrop of intensifying debt crisis in Eurozone, political turmoil in the Middle East, higher crude oil price and earthquake in Japan. Moreover, the key factors behind the deterioration in fiscal balance in FY2012 were slippages in direct tax revenue and increased subsidies. Thus, the budget has adequately addressed the same, through a host of measures