Fairval

Notes on Indian equities, sectors and economy

This was the most inconsequential budget

Posted by fairval on March 3, 2013

The last Union Budget of the UPA government did what the last few one have done – focus on welfare spending; and other than lip service little regard for reviving the private sector.

For the 6th year in a row (FY09, FY10, FY11, FY12, FY13, and now FY14e), fiscal deficit will be around 5% or more. Given that, at one point fiscal deficit was supposed to come down 3% by 2007, this is totally criminal. The latest road map now targets 2017 as the year by which deficit would come to 3%. Of course, no one need believe this anymore that the 2007 target.

The projected fiscal deficit number for FY14 is 4.8%. But I dont think the UPA government gives two hoots about this now. If they lose the elections, then the next government cleans up. If the win, then they have 5 more years to loot the country.

Anyway, here are the budget numbers. In terms of likely outcomes: tax revenue projection looks reasonable. Non-tax revenue could once again undershoot, like in FY13. In FY13,  the government cut spends to control deficit, paying some heed to the threat of rating downgrade. In FY14, I suspect, it is unlikely to cut spends, whatever happens to revenue

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