B'day's here! Is PC ready to keep poll pledges?
The UPA government will present its third annual budget on Tuesday amid pressure from its Left allies.
By Agencies |
The Congress-led UPA government will present its third annual budget on Tuesday since coming to power in May 2004 amid pressure from its Left allies to deliver on the pledges it made to the to the poor.
The government, which banks on the outside support of several communist parties for its parliamentary majority, has pledged to improve the lives of the almost 300 million Indians who live below the poverty line.
The business community is also expecting gains, with the country's main stock market index, the Sensex, up to a record high of 10,282.09 Monday ahead of the budget for the fiscal year starting April 1.
On Monday, the government maintained its better-than-expected economic growth forecast of 8.1 percent for the fiscal year ending March in the annual pre-budget economic survey.
The news buoyed the market and raised expectations that Finance Minister Palaniappan Chidambaram will call for greater foreign direct investment (FDI) in India's economy.
The government, which banks on the outside support of several communist parties for its parliamentary majority, has pledged to improve the lives of the almost 300 million Indians who live below the poverty line.
The business community is also expecting gains, with the country's main stock market index, the Sensex, up to a record high of 10,282.09 Monday ahead of the budget for the fiscal year starting April 1.
On Monday, the government maintained its better-than-expected economic growth forecast of 8.1 percent for the fiscal year ending March in the annual pre-budget economic survey.
The news buoyed the market and raised expectations that Finance Minister Palaniappan Chidambaram will call for greater foreign direct investment (FDI) in India's economy.
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The Indian government is expected to further open up the economy through the FDI route. Overseas investors would like to see a focus on infrastructure, power and the retail sector.
Other than boosting the agri economy, retail and textile sectors could be the other two focus areas. The agricultural sector accounts for almost a quarter of the economy and employs the vast majority of its one-billion-plus population and the government this year launched a massive jobs programme to help poor farm labourers.
However, the market may not welcome a too pro-agriculture policy or a greater emphasis on improving the lot of the poor by levying new taxes on the corporates and the salaried people.
"We would be happy to see the finance minister keep things at status-quo
and signal the direction ahead," said Bidisha Ganguly, chief economist of BRICS
Securities, talking to a news agency.
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"A further rationalising (cut) in the corporate tax structure would be
welcome," she said.
Another analyst said he expected a tax on share market transactions, but no
increase in income tax.
Among expected measures are moves to improve India's infrastructure and power situation, seen as key to spurring growth.
Chidambaram is also expected to widen services taxes -- which account for just five per cent of tax revenues but 50 per cent of GDP -- to bring in more revenues to finance social spending, analysts said.
Thanks to robust growth, the fiscal deficit as a proportion of GDP is seen failing to meet the government's goal of 4.3 per cent and remain on track to hit three per cent by 2009. The government missed its deficit target last year.
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But the size of the shortfall -- long a worry of ratings agencies, who say high borrowings will restrain growth -- is expected to rise in raw numbers as the government seeks to pay for welfare projects.
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