February 18, 2010 by akhilendra

Big Bang Budget

Sharing is Caring

If you are planning to buy a new car, computer, home or any other thing, this is the time to speculate. Some will says prices are going to increase after budget and some will say, wait for budget, prices are going to come down.  This is the period of apprehensions, anticipations and speculations. Stock market has started showing signs of volatility.  This time, Union Budget is going to be a bit different. Probably because, economy is moving out of recession and mode is tackling recovery rather than slow down. Food prices are already soaring high and inflation is flying high.

Finance Minister Pranab Mukherji has recently stated that economy could grow at a pace higher that 7.2 per cent, earlier projected by the government.  Central Statistical Organisation (CSO) has recently said that economy growth would be in higher circuit. Most of the predictions by various bodies are talking about growth rate which is higher than 7 per cent. Most of the sectors are still asking for incentives and tax cuts. People are eyeing something on Direct Tax code and other monetary benefits.  RBI has already spoke about withdrawing stimulus and industry has already shown resistant to any such move, So, in so much of fuss and expectations, it is going to be very hard for FM to balance at growth side and inflation side.

Government is already under pressure of reducing its fiscal deficit and adding to it is the inflation. RBI has started taking steps toward tightening monetary policies, but it is going to be very tough to satisfy companies and their customers.  Kirit Parikh Committee has recently recommended government on freeing of petrol and diesel prices and a steep hike in LPG and kerosene rates. It will be achieved by reducing subsidy. It will be a landmark in Indian Economy, if it is implemented. It will serve a very significant role in bringing down the subsidy burden for the government.

The committee was headed by the former Planning Commission member Kirit Parikh which recommended freeing of petrol and diesel prices, while raising kerosene and domestic LPG rates by Rs. 6 per litre and Rs. 100 per cylinder respectively.

Amid all of this confusion and challenges, government has already begun its fielding. Market is moving range bound and Business houses have started lobbying for their sectors. People are having their own wish list; in politics we have often seen good politics defeating good economics. But now things have changed, people are more aware about economical issues and negative repercussions which may follow a bad move, So one can be a bit a more optimistic about a Union Budget which would be more towards good economics in comparison of past budgets. It is not going to be absolute towards any side, but in India, it would be expecting too much if we expect budget to be more towards economical side.

Sharing is Caring