In continuation of the tradition usually followed by governments that present the interim budget, the UPA government's interim budget was also silent on most of the expectations that the market had build from it, says Dinesh Thakkar, chairman and managing director, Angel Broking.

There were no direct or indirect tax cuts and no major fiscal sops for any industry barring the extension of interest subvention relief to the export led sectors. Thus, as expected, broadly, the government has stuck to the pre-election primary agenda of promoting agriculture, increasing employment, continuation of social welfare schemes, focus on health and education, etc.By focusing on such measures, the government intends to take care of a substantial chunk of its electorate, considering that 60-65 per cent of India still lives in rural areas, adds Thakkar.

However, the government has indicated that tax rates need to be cut in a time of crisis, and there is a need to provide fiscal stimulus by increasing the Plan expenditure substantially.

With this, the UPA government has hinted at its agenda in the full-fledged Budget that would be announced if it comes back to power after the general elections in May-June.

"The stockmarket has reacted negatively to the interim budget primarily owing to the fact that it lacked any announcement that could have provided some cheer to it. We continue to believe that in the near-term, once the hangover of the interim budget is through, Indian stockmarket trends would continue to be dictated by global news flows and global stockmarket trends," he said.
 
"In the long term, however, we are confident that considering the growth path that India has embarked upon, notwithstanding the near-term challenges, it is enough reason for the world to shift their focus back onto India," he added.

Dipen Shah, vice president, private client group - research, Kotak Securities, said the vote-on-account was a non-event for the markets with no major initiatives or measures being announced. "While a vote-on-account does not normally contain any major initiatives, we had expected some sector-specific relief. This expectation was in view of the weak economic environment," he said.

The vote-on-account did little except announce some specific allocations to the social sector flagship programs of the UPA government. While higher spend on schemes like the Bharat Nirman may help in infrastructure creation, "we believe these may help the government in the upcoming general election. Fiscal measures are expected to be announced in the full budget following the general elections, depending on the economic scenario," Shah said.

The vote-on-account has revised the FY09 fiscal deficit to 6 per cent and revenue deficit to 4.4 per cent of GDP, which are significantly beyond the budget estimates. This rise is mainly because of the fiscal measures taken during the fiscal, loan waiver package and also the higher subsidies.

While the FY10 deficit figures are expected to be lower than FY09 revised estimates in percentage terms, the finance minister has assumed a rise in revenues in FY10 v/s FY09. This may be difficult to achieve in the backdrop of a weak economy. Also, including the deficit at state level, the fiscal deficit is expected to be significantly higher, says Shah.

The agri research desk, Religare Commodities Ltd, says the government has tried to provide relief by continuing to provide credit support to the farm community. Further, debt waiver and interest subvention has further helped the rural economy to maintain its growth during the overall environment of recession.

Foodgrain production prospects are better during 2008-09, which is a relieving factor for the government to help contain the inflation caused due to essential food items. But from agri-commodities market perspective, there is no direct immediate positive or negative factor, says the commodities major.

More investment to the agricultural sector coupled with satisfactory agricultural growth amidst good production prospects would further strengthen the trading activities, as such kind of stable environment encourages increased participation of various parties, say the researchers.