A very good show by the Finance Minister, partially owing to the elections coming up. The budget has pretty much covered all the issues that faced the nation today. With the Global markets getting dirty and the Finance ministry and the RBI looking at further control for the economy from a crash, the stock markets were fearing a lot of bad news.
While the Dividend Distribution Tax remains, the Short Term Capital Gains tax stands revised to 15% from 10%. Hmm.. thats even more pressure on day traders' margins. Hopefully that would reduce the volume of speculation that typically aggravates an upward or downward movement.
Even as the RBI tracked inflation rates were pretty low, common man was increasingly feeling a rise in prices across items. In the end market, somehow the exhuberance of a controlled inflation was not evident as housewives bargained profusely to check monthly home budgets. The increase in income tax slab has clearly provided some relief for the largest middle class of the World. A minimum of Rs. 4000 rupees of rebate would therefore be applicable. Deductions on both the direct and indirect taxes front would cost the Government Rs. 5900 crores. However, he forecasts that the high growth would offset the loss. The slew of measure would ensure that purchasing power remains at the right hands, the consumers. This clearly would help mitigate recessionary pressures in the economy as the Global economy goes on to a slowdown.
The bumper announcement of this year's budget was the debt waiver and one time relief for small and marginal farmers. No impact is seen in the Economy at large since the money is pretty paltry for the Financial system at large. However, it would be a serious dent on the Fiscal side for the government when it gets down to settling the loans with the banks. Am not sure whether agricultural suicides are going to decline, as most farmers depend on moneylenders for credit. This would be a serious dampner for those farmers who are honest with their credit settlements.
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