Interim budget disappoints markets; Nifty ends below 2850

16 February 2009

The markets have reacted quite sharply to the UPA's interim budget today. The benchmark indices had started in the negative terrain. But fell further after the statement from Pranab Mukherjee, the stand-in Prime Minister and Finance Minister of India.

He said the government has relaxed fiscal responsibility & budget management targets. There may be need to consider additional fiscal measures in the next regular budget. The government needs to revert to the fiscal consolidation at the earliest.

There are not any changes on the tax front. The Government expects FY10 revenue deficit at 4% and fiscal deficit at 5.5%. FY10 gross tax revenues are expected at Rs 6.71 lakh crore and major subsidy spending for FY10 is seen at Rs 95,500 crore.

Analysts say that the interim budget was more of a dampener as it has neither given any positive surprise for the market nor any negative measure for the sectors. The stocks have ended on a weak note post budget announcement as analysts feel that the interim budget failed to meet the expectations of the markets.

Ashok Wadhwa, CEO, Ambit Corporation, said the market had higher expectations from the interim Budget. He feels removal of surcharge or cess would have boosted domestic demand.

Wadhwa feels Interim Budget had the missed out on the opportunity to give economy the much need push. ''All big initiatives have been announced outside the Budget, and now we may see one more interest rate cut before the elections.''