Budget 2010-11 Highlights
q The fiscal deficit of 5.5% for FY11 is better than our expectation of 5.7%. The roadmap to reduce it further to 4.8% and 4.1% in FY12 and FY13 is welcome
q Govt borrowings capped at Rs3.5 tn; +ve
q Indirect tax: Rollback of 2% is as per market expectation
q No change in service tax is a positive surprise
q Reduction in surcharge from 10% to 7.5% +ve, but MAT increase from 15% to 18% marginally -ve
q Overall, we believe that the budget was positive for the economy/market and there was no major negative surprise
q However, after the initial euphoria, market will start following the fundamentals of the economy, corporate earnings and the global events
However, the real debate is:
q Whether the fiscal deficit will slip beyond 5.5%?
q Whether the revenues targets are overstated and the expenses are understated?
q Why there was no commitment in the FM's speech to curb the inflation?
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