UNCOMMON BUDGET FOR COMMON MAN

The budget presented by the present government including the railway budget is deprived of any announcements that have immediate short-term benefit to a common man. For years we have been accustomed to think that railway budget is primarily made to announce new trains and union budget is presented for providing tax incentives either by tweaking or changing income tax slab or increasing exemption limit. Both the budgets are uncommon in the sense that no new trains were announced in the railway budget presented by Railway Minster, Suresh Prabhu, and no major tax incentives were announced. Back of envelope calculation (assuming only long distance trains) shows that announcement of any new single train is hardly going to impact even 1% of the population. Similarly in a country where only around 3% of the citizen pays tax, it would have not made much of difference to change or tweak income tax slab. Therefore, this budget is for the entire 1.2 billion citizens of India that will bring ‘ache din’ for all.

Therefore, the budget has rightly done what it should be doing of laying a roadmap of growth and has once again demonstrated government’s commitment towards rebooting the Indian economy by improving the ease of doing business, transparency and consistency in the policies, stable tax regime, higher spending on infrastructure and seeking domestic and foreign capital to work for India’s economic growth. All these steps taken in this budget may not have immediate impact but will definitely have positive affect in long-term.

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Our experience with this government in last ten months has shown that this government have walked the talk and do not believe in lip service. The two live examples are the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Swachh Bharat Initiative. Official data reveals that 10 crore accounts have been opened under the PMJDY by December 24, 2014 against the government target of similar number of accounts by January 26, 2015. Likewise Swachh Bharat Abhiyan is also progressing in the right direction.

Though some critics will argue that fiscal deficit target has been eased in this budget. But I believe that this is the best government could have done in the current situation where the corporate sector is already struggling from higher debt and are not in a position to invest. Hence, it becomes government’s liability to kick-start the investment cycle, which will lay the way for accelerating the economic growth. Moreover, unlike previous government there is no concealed deficit in this budget and numbers seems to be prudent. Government’s sensible approach towards growth was fully supported by the RBI governor, when last Wednesday (March 04, 2015), in a yet other surprise move he cut the repo rate by 25 bps to 7.5 per cent. There is no doubt that present monetary and fiscal policies are working in tandem and we will definitely see double digit GDP growth sooner than expected. This will undeniably lead to better returns in the stock market.

The bull market makes primary market vibrant and we expect many Initial Public Offers (IPO) to hit the primary market in next couple months. One of our special reports is on IPO market that details the factors leading for such vibrancy in the primary market. How this budget is going to impact different sectors and more importantly your portfolio? Our cover story reviews eight major sectors and all the shares recommended in last one year that will help you to align your portfolio. Elsewhere in our issue we have done a special report on different style of investing.

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