Daily Archives: July 4, 2014

4Jul

Budget 2014 : The Expectations Of The Indian Investors From The Budget Of BJP Government

We all knew that, the budget is going to be presented in the parliament by the Finance Minister Mr. Arun Jaitley of newly formed BJP government. It may be announced the introductory budget on the 10th of July 2014 in the Parliament so that it can be passed before implementation.

What is Budget?

In simple words, it is all about the management of income and expenditure in such a way, that it will strengthen the financial condition as well as uplift the standard of living. While talking about the perspective of Indian government, budget is also called as ‘Union Budget Of India’. It is the Annual Financial draft or document or statement presented under the Financial and Appropriation Bill of the constitution. It is announced by the Finance Minister of the currently running government every year on last working day of the month February so that it can be executed on the first day of the financial year that is, 1st of April of the same year.

Interim Budget

This is the draft or statement about all the accounts which includes both income or earnings and the expenses deals by the government in the current financial year (starts at 1st April and ends on 31st May). This is somehow like the complete budget but mainly covers the new laws or bills introduced by the government including changes in the taxes and policies to tackle the economic growth of the country.

What Investors Are Hoping From The Budget Presented By Mr. Arun Jaitley?

Mr. Shashank Khade, one of the famous investment advisors said that, “Indian investors at large are leanly invested in Indian equities and high net-worth individuals also have been focused on capital conservation and asset classes with certainty of returns have been favored over equities.”

In another statement, he added, “Equity as an asset class needs to be made more attractive to the common Indian investor who has forgotten this asset class as a means to build wealth. The disposable incomes of the middle class working population need a boost to combat inflation and to create savings. A pre-requisite for building Indian investor confidence is revival of India’s economic conditions.”

There is no doubt that, the budget expected by newly formed government must support the economic growth, anti-inflationary, and very well committed to fiscal consolidation. The population who elected the government and the media which alarms the PM and ministry about the sentiments of citizens on every decision are looking hopefully towards the budget and the policies reveled by the finance ministry on the decision day.

4Jul

Budget 2014-15 : National Food Security Act

As we all knew that Mr. Arun Jaitley, Finance Minister of the newly formed government will present their first maiden budget on July 10, 2014. While talking about the present economy, he has to face multiple challenges while presenting the budget in the parliament. As the BJP promised to the voters before elections, the budget must be growth supportive and should be acceptable by the majority of the people. This might be the test for the government to answer on the question of living on the expectations of the supporters.

His first task as a representative of the policies of the government is,to contain the fiscal deficit for 2014-15 fiscal within 4.1% of GDP. Kelkar Committee outlined the strategic graph of the economy, according to that, fiscal deficit may brought down to 3% of the GDP in the coming financial year 2016-17. Unlike, in the financial year, 2013-14 India’s fiscal deficit was 4.5% of the GDP.

The economists assuming that, Mr Jaitley have an option to bring down the subsidies, which are accounted for 2.2% of the GDP in the year 2013-14, in order to attain the required fiscal consolidation. Moreover, the government has to uphold the Food Security Bill passed by the previous government to maintain the positive image among people, there is little scope for the finance ministry to reduce the subsidy on food items.

Ashok Gulati, ICRIER in an interview stated that, “Currently the public distribution system has a leakage rate of 40%,” said Mr Gulati. “If government wants to implement NFSA (National Food Security Act) through the public distribution system, unfortunately it will drill holes into the budget and not solve the purpose of tackling poverty and hunger”. He also added that, the government can save Rs. 50,000 crore to Rs. 60,000 crore annually by making subsidies more targeted and by plugging the leakages present in the system.

Mr. Gulati’s suggestion to our finance minister is to simplify the subsidy on the fertilizers which cost the government Rs. 68,000 crore in this fiscal. If government straightly distribute to the farmers on per hectre basis then we can again save 20-25% easily from that. This money can be saved and invested in other segments in optimum way for the growth of our country like, in infrastructure development, education, creating employment, armed forces and many other sectors. As expectations are more with the government, people as well as investors are eagerly waiting for budget announcement day.

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