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Monday 29 February 2016

ANNUAL BUDGET 2016-17: MERA GAON MERA DESH

After sinking almost sinking 500 points, Sensex has recovered by about 150 points by the time I started writing this blog. It took almost one hour to do that as the market had to digest the fact that it is not at all a ‘suit boot ki sarkar’. The theme of the whole budget was agriculture and rural development followed by social security schemes and infrastructure. The government aims to double the income of the farmers by 2019. Emphasis is laid on fast tracking irrigation projects, increasing cultivable area and more support to MGNRE scheme. Under rural development apart from budgetary allocations, two schemes have been launched to improve rural digital literacy to cover 6 crore households in the next three years. Laying more stress on these sectors were logical going by our monsoon track record of the past two years and falling rural consumption. For me personally social security schemes announced were the star performers with Rs. 2000 crore allocated for LPG connections in the name of women members and the health insurance scheme of Rs. 1 lakh for the BPL families. Infrastructure got a boost with Rs. 55000 crore allocation and Rs. 15000 crore for NHAI through bonds.

Though lot of incentives has been given for the Make In India and Job creation and skill development, the stock market remained unconcerned. The moment, the Finance Minister announced recapitalization of Rs. 25000 core, it went for a toss. They expected more pocket money, when everybody else is doing why can’t we?  Well, I think whatever is done is definitely in consultation with the RBI and there would be a substantial road map for that and FM has reiterated that if need arises sufficient support will be provided for PSU banks. And the best part was the indication given by the government that it may be ready to reduce its stake in PSU banks starting with IDBI bank. So why did the market fall? Well we are soo good in knee jerk reactions. And the other reason is the dividend distribution tax of 10% for the recipients who receive more than Rs. 10 lakhs as dividend, this is fair enough and also tax on crorepatis increased from 12% to 15%, so WHAT, you guys need to pay. See there are still 13000 villages in this country which need to be electrified.

Last but not the least our FISCAL DEFICIT, it has been curtailed at 3.9%, Congratulations and target stands at 3.5% for the next fiscal. So apart from the corporate, the Finance Minister was able to please everybody from Mr. Rajan to international rating agencies to farmers, women, middle and low income group people and of course our Prime Minister. Well, this was just a trailer, more analysis will follow in the coming blogs. I just hope there is a rate cut till then. Mr. Rajan, jo vada kiya wo nibhana padega…..   


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