Ratnesh Kumar, MD and CEO, Standard Chartered Securities applauded finance minister P Chidambaram for containing the fiscal deficit target of 4.8 percent for FY14 despite slowdown in tax revenues because of slowing economy.
Below is the interview of Ratnesh Kumar, MD & CEO, Standard Chartered Securities with Senthil Chengalvarayan and Latha Venkatesh of CNBC-TV18.
Latha: What is your first thought on the Budget itself with the excise cuts that the FM has announced and still saying that the fiscal deficit will be 4.1 percent?
A: The first reaction is that the market expectation for FY15 was around 4.2 percent and clearly, the finance minister is within the red line of 4.8 percent for this year and projecting 4.1 percent which is lower than the expectation of 4.2 percent for next year is positive. The intent is credible. The inside number, all assumptions have to be looked at but clearly that is something which is positive to look at and the way to understand some of these excise cuts, which are there, how they are balanced but you have had in the last six-twelve months, pretty significant slowdown happening in consumption also.
Senthil: Rs 35,000 crore is the rollover of fuel subsidies to next year, is that number credible especially given the fact that the total subsidy bill has gone up marginally from 2.45 lakh crore to 2.46 lakh crore?
A: Implicit in that is probably continuation of some of the diesel price hikes, which market will take reasonably positively because expectation was that maybe in the run up to the election that process halts. So we have to look at the fineprint, but what the FM has done in this budget despite the slowdown in tax revenues because of slowing economy, that he has been able to stay within 4.8 percent on which there is going to be a fair amount of credibility that he has gained.
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