Sunday, March 3, 2013

Budget flaps

People who follow Indian economy closely would vouch that the budget announced by Chidambaram is hopeless. But one should understand he also cannot do anything more. The damage is done already.

He knew Real Estate is the root cause but his hands are tied as many of his colleagues and many corporates and even big banks are in neck deep shit. Now a catastrophe cannot be avoided. I feel sorry for the country but it is necessary. Think of it like a surgery.Markets understood it and promptly tanked. Next in line to get its ass whipped is Real Estate. I would like to see some banks and real estate sharks collapse soon.

Enough about my emotions. Let us analyse the budget.

1. His only aim was to show the fiscal deficit number to 4.8% to avoid the rating downgrade. He has done it. But how?  He has under provided some subsidy numbers in Oil.  But I also agree, if crude falls he will be saved. But do you think oil prices will fall?  I am  not sure. US will not allow the prices to fall because they found huge oil reserves in their country and the middle east countries also a cartel. So I am not sure crude will come down and save Mr. P. Chidambaram.

2.  It seems he has under provided for fertilizer subsidy also.

3. He has assumed huge income from divestment. This may not work out as stock market sentiment is not going to be that good to sell the shares.

4. Spectrum price assumptions also will go wrong as our corporates dont want to pay more money to spectrum.

5. He assumed robust tax income ( both direct and indirect) for next year to bridge the gaps. Unfortunately our growth nosedived from past few months and remember the Q3 of current month GDP is just 4.5. Just extrapolate and I will not be surprised to see sub 3% growth for next year.  Trust me. This will happen. Car sales nosedived. You will not believe the real estate figures if they originally report the figures. Any country which only focus on saving real estate brokers ass is doomed to fall.

To understand the above points, we need not have studied in Harvard. We know the knowledge / intelligent level of harvard educated guys already :)

Some analysts praised his budget only because he did not announce any social welfare schemes. But that is not enough.

I am not only complaining. I have the solution. It is a bitter medicine. Eat on your own. At least you will satisfy your ego. If you are force feed, you will look like an idiot in world arena. But sadly that is what going to happen.

1 comment :

  1. Budget 2013 has proved to be realistic and positive for the ratings