i Develop Stocks Advisory

Budget the class …………. Budget 2008-2009 Update on 29 February 2008 2:45 p.m iDevelop rate this as by far the best Budget of Mr Chidambaram in his stint as F M. It was never easy to give a populist Budget with 60 K crs debt waiver with no increase in tax in a major way. You always need to assess the Budget in the given set of circumstances and not in general parlance. Only 3 issues were negative one that debt waiver and two that of 15% S T G T. If the corporates were paying 12.5% MAT even on L T G T when individuals were paying zero tax and hence this may not be considered major negative. Alternatively investors were reconciled to pay littler higher STT which is now matched with 5 % hike in S T G T and hence not considered non sense. Third issue is STT. In any case STT was not available for ST and LT trades. As far business income goes such as derivative trades STT will now be available as business expenditure. This is again a very good move which will remove the ambiguity once for all for traders. They will now show all jobbing trades in biz income and claim expenditure. It should also be noted that when you claim this biz expenditure they you can set off the same against your other income. An earlier trader has no choice than to waste STT when it was exceeding their tax liability. This Budget in my opinion is BIG positive for 2 reasons. One that it gave what FII wanted. A fiscal deficit of 2.5 % of GDP is very big positive for funds who wants to invest in India. Two; that by writing off debts it made a clear ground of succeeding elections through rural India. It was never easy to walk the rope and F M did it. To announce Rs 5 lac income tax bracket is very bold step which earlier also only this F M had dared. This will bring the saving of Indian households to tax be default which will do the trick of inflation control. Since pvt spending will rise it will offset the banking industry’s worry of reducing rates for containing inflation. Now coming back to tax breaks this breaks will result revenue loss of at least 4 bn SUD for the Govt yet Govt succeeded in giving 2.5 F D. This 4 bn is only from salaried class which will go into productive channels. This 4 bn USD assets will in turn create more revenues and employment opportunities. One more major reform orientation done in the Budget is that after plugging public systems of money laundering through compulsory PAN and lot of other checks, he has dared to clean his own house. He has attacked the bureaucratic system by introducing more checks Govt spending. One that the leakages will stop to great extent and two that the spending will start actually benefiting the end users. So far the spending never used to reach the actual beneficiary which means the spending was only on paper and hence it never contributed to the infrastructure and social development desired through these spending. This will definitely help revive GDP is larger interest. Truly now we are racing towards more transparency because they only hitch so far in the growth of India on global scale was controlling Govt spending. If F M has succeeded in bringing down the fiscal deficit to Rs 133000 crs as against Rs 148000 crs on wider GDP of 42 lac crs then he has achieved it what he wanted. In fact, we were anticipating F D at 3.1 and it came at 3.1 which mean I DEVELOP economist is bang on target. This year Govt succeeded in getting additional revenue of close to 40 K crs which though seems bit difficult to be repeated in 09 I am sure the same amount or even more will come from disciplined expenditure and stoppage of expenditure leakage which was graver than revenue leakage. Another important feature of the Budget is that F M has now admitted that the size must change which can give India yet larger exposure for investment from perspective of the global investors. In short Budget is A class and market will salute the Hon’ble F M sooner than later after they realise that it was good. We at I DEVELOP always remain first and we can’t lose this opportunity. Nifty will cross 7K in next 6 months and even GOD would not say now this will not happen as the most exciting event has passed on a very good note though market players will take time to understand as usual. Short term trends are beyond anybody’s control and assessment though you can always count on long term calls. The GURU of Warren Buffet Nr Graham Benjamin has said once that “I have noticed anything over these 60 years on Wall Street , it is that people do not succeed in forecasting what is going to happen to the stock market. “