The interim-budget...

Today our Finance Minister presented the interim budget for the interim period the government has left in the office. Our FM lacked enthusiasm… and this was reflected in the stock and gold market. The gold market gained more value than the stock market which is a sign that given the fiscal picture and inflation we can not hope too much from our stock-market… RBI’s stance too…

 But, this time too our FM managed to bring fiscal deficit down by 2 bps to 4.6% from the targeted 4.8% of GDP. To achieve this end he has cut plan expenditure by 79 k crore which is good from the point of view of lower expenditure and lower inflation… It’s like a feather in our FM’s cap… from the point of view of a good rating too… For the year 2014-15 he has set a target of 4.1% which does not worth a comment because it may change as the full-budget may change the goal post…

The FM continues 10% surcharge on super rich, income more than 1 crore. However, he said he would like to see higher income tax for the super-rich in the full budget...

There are no sops for common-man except reduction in excise duty in the automobiles which is expected to boost demand in the sector and growth for the economy... Excise duty cut is a positive for the consumers… lower prices… However, excise duty on mobiles has gone up…

Skill development gets same as the previous year 1000 crore and has been underlined as the priority with other basic facilities like education and sanitation…

The government has kept fertilizer subsidy unchanged as the previous year…. Good for food inflation… The FM has increased interest subsidy on educational loans…

But, Petroleum subsidy will go down and prices will increase which will result in higher transportation cost… bad from inflation point of view… But good for petroleum industry prices and profits will go-up…

Our FM has repeated the RBI’s words that inflation is still a problem and especially the food inflation but no indication how to tackle the problem…

Nevertheless it was an interim-budget and is liable for changes in the due course… like the next government may increase the outlay in skill-development…

Let us hope the full-budget comes with a better targeted expenditure because too much spending in a supply constrained economy stokes demand resulting in inflation… The budget has a scope to target better expenditure…

Jobs are most important because they make life easier. Good paying jobs are also good from a revenue perspective. They make a person independent… not dependent on the State. The government should push the economy into income tax zones…