Budget 2011 could see some tax reduction, says Ashith Kampani, JM Financial

Ashith Kampani, JM Financial, MD-Investment Banking, in a chat with ET Now talks about the budget and the markets.

To your mind what are the chances that Union Budget 2011 could be a turning point for Indian markets?

Everybody has huge expectations of budget every year. The most important aspect of the budget is that it is a balancing act as to how much revenue they generate and how much they spent. The second thing is that when they say they are going to spend, they need to implement that they are spending that money. So it comes back into the economy.

The expectations are always high and we are coming on a back of the last parliament session not running. There could be some taxation reduction and some big large announcement which needs to be followed - may be on the FDI, on retail or FDI and insurance. These are the some of the likely expectations.

The Finance Minister needs to balance the budget and when you say balance the budget it means that on the one side he needs to take care of the revenue where he needs to create some kind of avenue where he will collect the tax and on the other side he will reduce the taxation on aam aadmi so that people will feel that they have got a good budget.

There are two things which we need to watch out. One is agriculture where we need to boost supply chain. So there could be some kind of an indication where they are giving tax sops to people who are setting up the supply chain on the infrastructure side.
Second thing is that if right to bank is implemented it means all the rural areas will get the banking facility which will be a very transparent way of transferring money to the people so that NREGA type of situation - where there is slippage and leakage - is avoided and that money comes back into the economy.