My heart is breaking...? FII have bisected views as only few are negative on Rs 60k debt waiver issue but most of them are pleased with 2 issues one containment of fiscal deficit at 2.5 pc of the GDP and 2nd that for the first time F M has given stress on reducing expenditure by almost 20%. Some claim that it is impossible whereas sources close to FM say that he will do it. If he can do this it will be a major departure from all his earlier budgets. I have no doubt in my mind whatsoever with regard to the quality of the budget and even the resources required for making debt waivers of Rs 20000 crs. We are talking of really petty things now as the vision is getting junked. In my opinion this budget has potential to surprise the revenue substantially as it did last year. From 116% to 144% last year then why can’t from 118% to at least 136% that too after accounting the generous tax forgone of Rs 20000 crs on limit rise. There are not a single instance in 7 budgets presented by this JUGLLER to fail on the revenue front. In fact, in his interview post budget he has very boldly said that he has kept enough headroom to fall back on it. This clearly means that the projection of 18% is underestimated. This goes well in favour of 9% GDP growth and 35% earnings growth in case of corporates. In fact, I strongly believe that FM might surprise the street and the whole world by bringing the F D to 2.2 pc well before elections. This is possible if the revenues exceed by Rs 16000 crs. In short even after accounting the so called Rs 20000 crs (if required) plus the 6th pay commission cost Rs 15000 crs FM needs to see that the revenue exceeds by Rs 51000 crs and going by past trends it seems feasible. The savings of Rs 50000 per salaried class, new capital generation of Rs 2.5 lac per assessee and the actual beneficiary of 60K debt waivers, and 65 K subsidiary in real sense could add at least 20 bn USD as additional liquidity for spurring growth and a sum of Rs 12 to 15 bn USD could be added as contribution to revenue every year due these measures which will help the Hon’ble FM to meet his estimates. I am not aware other headroom kept by him which should be nothing less than bonus. With 9% GDP growth and 35% corporate earnings and 13 PE if FII wants to leave We are here to express our views which we have done with rigorous intensity. However those who want to subscribe to Nifty 4400 or even below views may do it own their own. We will stick with our house policy no sell call come what it may ….? Every correction has to be used as only a buying opportunity as we still believe that we are in long term “If it were not for hopes, the heart would break." |
Monday, March 3, 2008
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