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Analysis: India Interim Budget 2009-2010

The UPA government presented its farewell budget (Interim Budget) ahead of general elections slated later this year. While the markets were disappointed that the proposals were devoid of a stimulus package, there were no sops for the Indian taxpayers.

Here is an analysis of Interim Budget 2009-10 from top research houses across India.

Kaushal Sampat, COO, Dun & Bradstreet India

Although this was an interim budget, it was expected that there would be announcements of some policy measures that would be growth stimulating in nature.

While acknowledging that the Indian economy is faced with significant challenges in the financial year ahead, the Finance Minister stuck with the conventions of an interim budget and did not announce any policies that could trigger retrieval of the economy from the current slowdown.

Although the outlay on certain infrastructure projects has been increased, it is doubtful if this would be enough to kick-start investment at the required levels.

In line with our expectations, the fiscal deficit has surged and stands at around 7.8% of GDP in FY09 (including off-budget liabilities).

Although the high fiscal deficit has potential risks for the economy in the future, it is inevitable given the need for substantial increase in Government expenditure and the limited scope for revenue mobilization.

With the lack of major growth stimulating measures in the interim budget, we expect the RBI to cut interest rates further before the April’08 monetary policy review to stimulate demand to a certain extent.

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February 17, 2009 - Posted by | Business, Economy, Indian Economy, News, Politics | , , , , , , ,

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