Post- Budget Panel Discussion held at IIFT Kolkata

A Marketable Budget!

2^nd March 2010- The Kolkata wing of ‘Cash-O-Nova’, the Finance club at IIFT, organized a panel discussion on Union Budget 2010-11. The distinguished panel comprised of Dr. Ajitava RayChaudhari, former Head of Economics Department at Jadhavpur University, Mr. Gopal Aggarwal, Indirect Tax Consultant, PricewaterhouseCoopers and Mr. Chetan Panchamia, Head, Equity Research Division, Eastern Financial Ltd. The discussion was moderated by Dr. Ranajay Bhattacharya, an Economics graduate and Fulbright scholar and also a popular professor at IIFT.

Dr. Bhattacharya stated that like every year the current budget too reflected the tussle between economics and politics. He set the tone by stating that this budget was “less popular” than the previous one. However this view was opposed by Dr. RayChaudhary who stated the dual problem of growth and inflation that India faces and said that only innovative budgets would be the way out. He explained how strong social programmes and the rise of the Indian middle class had helped fuel demand but due to poor monsoons we had short supply. This was causing the inflation and he thought only long term measure such as projects under Bharat Nirman like building roads and in general agriculture infrastructure would be the way out. He stressed that budget being basically a one year plan could not cure the problem of inflation; rather what it could do is set the road map for the future. He also emphasized the need to remove the subsidies unless it was absolutely ensured that it benefitted the intended persons. He welcomed the idea of Unique Identification number (UID) programme as a solution to this problem. He did criticize the hike in indirect taxes as this would hit the poorer people more than the middle class and rich.

Mr. Aggarwal voiced a similar opinion on the increase in indirect tax. He reiterated that while the change in slabs made the budget a good one for the middle and high income families, the poor were not incentivized enough. However, he lauded the fact that the honourable finance minister had set a specific date (April 2011) for the Goods and Services Tax (GST). He saw this as a step which will remove the cascading effect of the various excise tax, customs tax etc. He also spotted a trend of a fall in the excise tax and increase in service tax. He said that this was an indicator that India was slowly but steadily moving towards service taxes. He rated the budget a modest 7 on a scale of 10.

Stock market’s reaction is an important indicator of the marketability of a budget and according to Mr. Panchamia the budget was a very marketable one. It not only addressed the question of fiscal consolidation but also stated that the aim was to get the fiscal deficit down to 5.5% of GDP. This was in fact what the market was looking forward to hear as this would mean a better rating from credit agencies, thereby ensuring more inflow of FII. However he did mention that the oil subsidy had caused the debt market to give thumbs down to the budget. He was of the view that markets would be bullish as long as we avoided global pitfalls.

We also witnessed a very good discussion at the end of the session with the floor been thrown open to the students. Prof. RayChaudhari pacified the concerns raised by the students regarding overheating of economy by emphasizing on the importance of technological development. He favoured more focus on developing infrastructure over doling out subsidies. Mr. Chetan was optimistic regarding the disinvestment of the PSUs and Mr. Aggarwal felt that there was a high probability of IT tax cuts being extended by the turn of the year. The session was closed on a positive note with the speakers reasserting that there were definite benefits from this budget such as the bringing of the GST. The final assessment termed it a budget on expected lines and definitely not a path breaking one.

By: Sayani Ghosh

MBA(IB)

2009-11, IIFT

Union Budget 2010- Some Highlights

Our honourable Finance Minister Dr.Pranab Mukherjee announced the union budget on 26^th February, 2010. The budget has been termed as disappointing, consolidating, relief oriented and good marketing budget by different people. But I would like to term it as a moderately positive budget. There are some pros and cons for everyone in the budget. Let’s take a look at the objectives behind this year’s budget-

1. To maintain a growth rate of around 8% per year.

2. To reduce the fiscal deficit of the country.

3. To have an inclusive development.

4. Encouraging disinvestment in PSU’s to the tune of Rs. 25000 crore.

5. To ensure good allocation of money in building of infrastructure.

6. To give relief to export sector as well as for agriculture.

7. To reduce the rising Inflation rate.

The budget aimed at achieving all these objectives but sadly, seldom does it happen that we achieve all that we wish. The key announcements that were made in this year’s budget were-

· Changes in the tax slab- A step towards Direct Tax Code

2010-11			2009-10
Income		Tax	Income	Tax
0-160000		Nil	0-160000	Nil
160000-500000		10%	160000-300000	10%
500000-800000		20%	300000-500000	20%
8,00,000 and Above	30%		5,00,000 and above	30%

· Increase in Minimum Alternate Tax from 15% to 18% of book profits.

· Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent.

· Rate reduction in Central Excise duties to be rolled back

· Standard rate on all non-petroleum products enhanced from 8 per cent to 10 per cent

· Helping growth in agriculture by helping in increasing agricultural production.

· Providing credit support to farmers.

· Providing around 1,73,000 crore for the development of Infrastructure.

· Rs 1,900 crore allocated to the Unique Identification Authority of India (UIDAI)

for 2010-11

The budget was basically aimed at benefitting the common man and as expected did not offer much to corporate India. Some rates like excise duty have been increased keeping in view the government’s plan to implement GST from next year. Similarly, the slabs for tax have been expanded keeping in mind the Direct Tax Code expected to be implemented from next year.

All in all, the budget focused on consolidation and I am hopeful that Indian economy will grow at a good pace this year too and the announcements made in the budget will only help achieve our dream of 9% growth each year.

Contributed By-

Arun Singhal

Coordinator

Cashonova, Finance Club

Indian Institute Of Foreign Trade

Budget analysis session at IIFT Delhi

Corporate Relations Committee of IIFT organised a budget analysis session on 2^nd March 2010. The objective of the session was to analyse various aspects of the budget from different perspectives. The speakers who graced the occasion were

1. Mr. Mohit Satyanand, who is an entrepreneur & Investment Advisor and is also a columnist with Outlook India,

2. Mr. M G Ramachandran, who is an Associate Director, PWC -Tax & Regulatory Services,

3. Prof. Rajan Ratna, Centre for WTO Studies, IIFT.

Ms. Madhuri Ghosh, the co-ordinator of CRC, introduced the speakers to the audience of over hundred.

Mr. Ramachandran started the analysis with his presentation. He elaborated all the changes made in the tax laws – both direct and indirect.

Next speaker was Prof Ratna who pointed out the fact that the budget was not for Aam admi. He justified his opinion by saying that the goods on which the excise duties have been cut like set top boxes, LCD TVs, mobile accessories are not what an ordinary man use heavily in his daily life. He also stressed on the fact of monitoring the funds allocated to various schemes.

The final speaker was Mr. Satyanand who is also a graduate from Delhi School of economics. He stressed upon the economic and political impact of the budget. He opined that the finance minister has taken a very optimistic assumption that fiscal deficit can be controlled by 3G auctioning and disinvestment provisions. Mr. Satyanand also said that we need to restore world confidence in India which is quite low at this point in time. This can be interpreted from the fact that the 10 year bond yields are trading at 7.92 % whereas in an unstable economy like Greece, it is trading at 7 %. So, Government could have done something to make world realise that India is a safe haven for investments.

After the discussions, the floor was opened for questions. Doubts over hike in MAT, rationale behind extra deduction by investing in Infrastructure bonds, deregulation of oil prices etc. came up, which was solved in a very comprehensive manner by the distinguished panellists.

At last, the vote of thanks was given by Madhuri and bouquets were presented to the speakers by the IMF (student body) president Arakkal Vedhus and Ms. Ishaani Gandhar, the convenor of CRC.

The session was very useful in the sense that three different speakers from diversified backgrounds helped us to understand the budget from three separate angles.

By-

Saurav Tibrewal

Co-ordinator, Cash-o-nova, The finance club

MBA(IB) 2009-11 batch

Indian Institute of Foreign Trade

Delhi Campus