Union Budget -Impact On The Economy and.......
The Union Budget 2010-11 presented on last Friday has several important implications for the economy as well as equity and debt markets for the year ahead. Broadly speaking, the government aims to improve its finances by reducing subsidies and normalizing indirect taxes even as it has reduced income taxes on individuals. Over the last couple of years, because of the macro-economic crisis and rise in subsidies due to high commodity prices, the government’s finances weakened considerably and the government has announced a multi-year road map to improve its finances. Specifically this budget aims to reduce the gap between the government’s overall revenue and expenditure, called fiscal deficit, from 6.7% in FY2010 to an estimated 5.5% in FY2011. The most important driver of improving long-term finances, and indeed generating surpluses necessary for investment, is growth in economic activity. The budget has either maintained the momentum, or increased it, as far as demand drivers of the eco