MFF – 090215 – 20:00 Hrs

+ External Affairs minister Pranab Mukherjee would be presenting the Interim budget tomorrow in the parliament on behalf of PM who in turn took charge of the finance ministry after removing Chidambaram from the post. Infact the step to make Chidambaram the home minister was an indirect step to remove him from the post of FM. Infact today the Home Minister has inaugurated a branch of uco bank which clearly indicates though not a FM officially, he participates in such functions!


+ So what do we expect from the Interim Budget? Till today in history this even has been termed as Vote on Account as generally the government only arranges/balances funds for the period till a new government is formed, but this time it is interim budget as big surprises are expected. The budget is likely to be populist. There might be other measures as well for instance a cut in rates by RBI looks likely before the country goes for elections. Inflation has fallen sharply and IIP data looks dismal hence to boost the manufacturing sector RBI has lot of room to cut rates.


+ Government is likely to further borrow upto 40000 crs, which indicates suppression of interest rates. The balance sheet of Bharat does not look favorable at all, we recently saw rating of India itself being cut by an international rating agency. These factors will not deter the present government from giving out some year-end gifts to the voting public. By voting public I do not include you or me as 80% of people like us do not go and vote!


+ Expect announcements like free insurance for people below poverty line, inclusion of more students into educational institutes. Cenvat may be cut leading to straight benefit to the consumers. Tax rates may not be touched since major decisions are not possible in this temporary government. One big thing that might be possible in order to please corporate India is “Complete Removal of FBT”


+ Market ofcourse would be volatile tomorrow and even if the interim budget delivers large benefits the cheer may be short lived as the same may be altered reversed once the new government comes in. Hence no major run anywhere. No major business expected tomorrow except for the media who will have lot of things to report. We shall meet here again after the budget is delivered and analysed.


Jai Hind

Vivek Karwa

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