06 July 2009

BUDGET 2009:Sensex closes 900 pts down, biggest fall since budget of 2001 as FY10 Fiscal Deficit at 6.8%

Sensex closes 900 pts down, biggest fall since budget of 2001

http://economictimes.indiatimes.com/unionbudget.cms

MUMBAI: Indian markets reacted sharply to the Union Budget 2009 presented by the finance minister Pranab Mukherjee. Indices had surged in run-up
BSE
to the budget on expectations of reforms but it turned out to be “budget of continuity and inclusive growth.”


The government has given thrust to infrastructure spending, raised income tax exemption limit and scrapped taxes like FBT and Commodities transaction tax.

Bombay Stock Exchange’s Sensex closed at 14,035.67, down 877.38 points or 5.88 per cent. The index touched an intra-day low of 13959.44 and high of 15097.87.

National Stock Exchange’s Nifty ended at 4162.80, down 261.45 points or 5.91 per cent. The broader index touched a low of 4133.70 and high of 4479.80.

BSE Midcap Index was down 5.15 per cent and BSE Smallcap Index declined 4.41 per cent.

BSE Realty Index fell 7.92 per cent, BSE Bankex slipped 7.72 per cent and BSE Metal Index was down 7.22 per cent.


Also Read
IT exemption limit increased, corporate tax rate unchanged
Budget 2009-10 lays major emphasis on infrastructure
Govt eyes Rs 1,120 cr via divestment; to hold min 51% in PSUs
Surcharge abolition to boost consumption: Chawla


Reliance Infrastructure (-13.11%), Jaiprakash Associates (-11.26%), Tata Steel (-10.56%), ICICI Bank (-9.85%) and DLF (-9.82%) were amongst the Sensex losers.

ITC (3.44%) and Hindustan Unilever (1.35%) were the only Sensex gainers.

Market breadth was negative on the BSE with 2002 losers and 568 gainers.

(All figures are provisional)

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News and Analysis

Budget speech: Thrust on agriculture

6 Jul 2009, 1520 hrs IST

Agriculture has been the mainstay of our economy with 60 per cent of our population deriving their sustenance from it.

Recovery dependent on global turnaround: Mukherjee

6 Jul 2009, 1518 hrs IST

Finance Minister Pranab Mukherjee on Monday said recovery of Indian economy in the current fiscal would be difficult unless there were "visible improvements" in the global economic scenario.

Higher education gets boost, IITs, NITs bag Rs.21 billion

6 Jul 2009, 1457 hrs IST

Continuing its thrust on higher education, the union budget 2009-10 Monday proposed to allocate over Rs.21 billion for the Indian Institutes of Technology (IITs) and the National Institutes of Technology (NITs).

Direct Taxes Code to simplify tax structure in 45 days

6 Jul 2009, 1456 hrs IST

The government on Monday promised to come out within 45 days with a framework for the Direct Taxes Code that will simplify tax structure.

Recovery dependent on global turnaround: Mukherjee

6 Jul 2009, 1456 hrs IST

Finance Minister Pranab Mukherjee Monday said recovery of Indian economy in the current fiscal would be difficult unless there were "visible improvements" in the global economic scenario.

Defence budget stays at Rs.141,703 crore

6 Jul 2009, 1450 hrs IST

India's defence expenditure during 2009-10 remains unchanged from Rs.141,703 crore ($28 billion) allocated in the interim budget earlier this year - which was a hike of 34 percent over the previous year.

Sensex posts biggest fall on Budget day since 2001 I BSE Realty Index is the biggest loser, down 8% I
News and Analysis

Budget speech: Thrust on agriculture

6 Jul 2009, 1520 hrs IST

Agriculture has been the mainstay of our economy with 60 per cent of our population deriving their sustenance from it.

Recovery dependent on global turnaround: Mukherjee

6 Jul 2009, 1518 hrs IST

Finance Minister Pranab Mukherjee on Monday said recovery of Indian economy in the current fiscal would be difficult unless there were "visible improvements" in the global economic scenario.

Higher education gets boost, IITs, NITs bag Rs.21 billion

6 Jul 2009, 1457 hrs IST

Continuing its thrust on higher education, the union budget 2009-10 Monday proposed to allocate over Rs.21 billion for the Indian Institutes of Technology (IITs) and the National Institutes of Technology (NITs).

Direct Taxes Code to simplify tax structure in 45 days

6 Jul 2009, 1456 hrs IST

The government on Monday promised to come out within 45 days with a framework for the Direct Taxes Code that will simplify tax structure.

Recovery dependent on global turnaround: Mukherjee

6 Jul 2009, 1456 hrs IST

Finance Minister Pranab Mukherjee Monday said recovery of Indian economy in the current fiscal would be difficult unless there were "visible improvements" in the global economic scenario.

Defence budget stays at Rs.141,703 crore

6 Jul 2009, 1450 hrs IST

India's defence expenditure during 2009-10 remains unchanged from Rs.141,703 crore ($28 billion) allocated in the interim budget earlier this year - which was a hike of 34 percent over the previous year.

Relief for media: Hike in ad rates to continue

6 Jul 2009, 1410 hrs IST

The government on Monday came to the rescue of a recession-hit media by extending the hike in government advertisement rates for print media by another six months.

Govt allocates resources for schemes to ensure inclusive growth

6 Jul 2009, 1406 hrs IST

Govt has set aside a reasonable amount of resources for schemes that would ensure inclusive growth in India. Here are the highlights

Duties on life-saving drugs reduced

6 Jul 2009, 1404 hrs IST

The government on Monday reduced basic customs duty on influenza vaccine and nine other specified life-saving drugs used for treating breast cancer, hepatitis-B, rheumatic arthritis, etc.

Three challenges before Indian economy

6 Jul 2009, 1403 hrs IST

The Indian economy faces primarily three challenges, according to Finance Minister Pranab Mukherjee's budget speech.

Rs 120 cr for Unique Identity Cards; first set in 18 months

6 Jul 2009, 1402 hrs IST

Countrymen will start getting the sophisticated unique identity cards from within the next 18 months with the government today allocating Rs 120 crore for the purpose in the general budget.

Funds for minority affairs up by 74 per cent

6 Jul 2009, 1347 hrs IST

Funds for the ministry of minority affairs has been hiked from Rs.1,000 crore to Rs.1,740 crore to implement projects for the welfare of the minorities.

Farmers's debt relief scheme extended

6 Jul 2009, 1344 hrs IST

The government has extended the debt relief scheme for farmers from June 30 to the end of the year, Finance Minister Pranab Mukherjee announced on Monday.


Pranab Mukherjee presents the regular budget after the new Government assumed office.

Expert Speak

Swami ranks Budget 5.5 out of 10Swami said what was disappointing was that Budget totally missed on a road map on issues like setting FRBM target.

Impact on You

Govt to create 12 mn jobs a year: FMPranab Mukherjee said that the economy has changed rapidly in past 10 years and the worst two quarters are behind us.

Market News

India not under rating strain: S&PIndia's BBB-minus sovereign rating, placed on negative outlook does not face any significant rating pressure despite high fiscal deficit.

Impact on You

One rank one pension for ex-servicemen

6 Jul 2009, 1459 hrs IST

Govt to improve the pension of pre 1.1.2006 defence pensioners below officer rank.

Higher education gets boost, IITs, NITs bag Rs.21 billion

6 Jul 2009, 1457 hrs IST

Continuing its thrust on higher education, the union budget 2009-10 Monday proposed to allocate over Rs.21 billion for the Indian Institutes of Technology (IITs) and the National Institutes of Technology (NITs).

Additional excise duty on big cars cut

6 Jul 2009, 1446 hrs IST

It also cut the duty of petrol-driven trucks to eight per cent from 20 per cent at present.

Govt to create 12 mn jobs a year: FM

6 Jul 2009, 1440 hrs IST

Pranab Mukherjee said that the economy has changed rapidly in past 10 years and the worst two quarters are behind us.

Budget a 'low-on-deliverance' affair: Angel Broking

6 Jul 2009, 1431 hrs IST

Dinesh Thakkar, CMD - Angel Broking, said, 'the Budget proved to be a 'low-on-deliverance' affair

Government proposes full interest subsidy scheme for poor students

6 Jul 2009, 1421 hrs IST

Presenting the Union Budget for 2009-10 in the Lok Sabha, Finance Minister Pranab Mukherjee said the interest subsidy scheme is expected to benefit nearly five lakh students.

Sensex posts biggest fall on Budget day since 2001 I BSE Realty Index is the biggest loser, down 8% I
Impact on You

One rank one pension for ex-servicemen

6 Jul 2009, 1459 hrs IST

Govt to improve the pension of pre 1.1.2006 defence pensioners below officer rank.

Higher education gets boost, IITs, NITs bag Rs.21 billion

6 Jul 2009, 1457 hrs IST

Continuing its thrust on higher education, the union budget 2009-10 Monday proposed to allocate over Rs.21 billion for the Indian Institutes of Technology (IITs) and the National Institutes of Technology (NITs).

Additional excise duty on big cars cut

6 Jul 2009, 1446 hrs IST

It also cut the duty of petrol-driven trucks to eight per cent from 20 per cent at present.

Govt to create 12 mn jobs a year: FM

6 Jul 2009, 1440 hrs IST

Pranab Mukherjee said that the economy has changed rapidly in past 10 years and the worst two quarters are behind us.

Budget a 'low-on-deliverance' affair: Angel Broking

6 Jul 2009, 1431 hrs IST

Dinesh Thakkar, CMD - Angel Broking, said, 'the Budget proved to be a 'low-on-deliverance' affair

Government proposes full interest subsidy scheme for poor students

6 Jul 2009, 1421 hrs IST

Presenting the Union Budget for 2009-10 in the Lok Sabha, Finance Minister Pranab Mukherjee said the interest subsidy scheme is expected to benefit nearly five lakh students.

Enhancement of the limit for payment of wealth tax

6 Jul 2009, 1419 hrs IST

With a view to providing for inflation-adjustment, it is proposed to raise the threshold limit for payment of wealth tax from fifteen lakh rupees to thirty lakh rupees.

Relief for media: Hike in ad rates to continue

6 Jul 2009, 1410 hrs IST

The government on Monday came to the rescue of a recession-hit media by extending the hike in government advertisement rates for print media by another six months.

Compensation received on voluntary retirement

6 Jul 2009, 1407 hrs IST

It is proposed that no relief shall be granted in respect of any amount received on his voluntary retirement.

Taxation of transactions on income from other sources

6 Jul 2009, 1405 hrs IST

It is, therefore proposed to provide that the value of any property received without consideration or for inadequte consideration will also be included in the computation of total income of the recipient.

Duties on life-saving drugs reduced

6 Jul 2009, 1404 hrs IST

The government on Monday reduced basic customs duty on influenza vaccine and nine other specified life-saving drugs used for treating breast cancer, hepatitis-B, rheumatic arthritis, etc.

Tax benefits for New Pension System

6 Jul 2009, 1404 hrs IST

To synchronise tax treatment under, it is proposed to make NPS Trust a complete pass-through in so far as taxation is concerned.

Enhancement of the limit for payment of advance tax

6 Jul 2009, 1403 hrs IST

With a view to providing for inflation adjustment, it is proposed to raise the threshold limit for payment of advance tax from the present five thousand rupees to ten thousand rupees.


More @ : http://economictimes.indiatimes.com/Union-Budget/Reactions/budgetnews/4700487.cms


News and Analysis

Budget to ensure inclusive growthGovt has set aside a reasonable amount of resources for schemes that would ensure inclusive growth in India. Here are the highlights
Budget Basics

Budget speech of Pranab Mukherjee, Minister of Finance

6 Jul 2009, 1528 hrs IST

Pranab Mukherjee presents the regular budget after the new Government assumed office.

Budget unsatisfactory but fair efforts to boost growth: Moody's

6 Jul 2009, 1521 hrs IST

Policymakers took expansionary steps in a wide range of areas including trade finance, farm subsidies, rural health, food security for poor households, and environment protection.

Bangaloreans cheer hike in income tax exemption

6 Jul 2009, 1510 hrs IST

Salaried residents of Bangalore have welcomed the proposed increase in income tax exemption limits for women and others by Rs.10,000 and scrapping of the fringe benefit tax (FBT).

BJP dubs budget as unimpressive

6 Jul 2009, 1423 hrs IST

BJP on Monday dubbed the general budget as timid, tepid and unimpressive while the Congress hailed Finance Minister Pranab Mukherjee for doing an 'excellent job'.

Budget a difficult balancing act: Rangarajan

6 Jul 2009, 1405 hrs IST

Former Reserve Bank of India (RBI) governor C. Rangarajan said Finance Minister Pranab Mukherjee's union budget presented in parliament Monday was a "difficult balancing act".

FM does a good job: Narayana Murthy

6 Jul 2009, 1358 hrs IST

We must realise that it's a difficult time. Whatever the FM did is good, says Infosys mentor Murthy.


Income Tax exemption limit increased

6 Jul 2009, 1530 hrs IST, AGENCIES

The exemption limit will now be Rs 240, 000 for senior citizens, Rs 190, 000 for women & Rs 160, 000 for others. What's your money worth? | Impact of budget




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Market Commentary

http://budget.moneycontrol.com/

Populist Budget spooks markets, Sensex crashes 869 pts

11:34

It's an aam aadmi budget


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Budget 2009 : Video

Sector Impact


Broker Reports
More Reports »


Som Mittal, NASSCOM

The Finance Minister�s decision to extend fiscal benefits available to the industry under Section 10A/10B for one year will help the industry mitigate the impac...


RS Sharma, ONGC

I feel, overall, the budget addresses the expectations and the focus has been more on the stability and the futuristic growth especially for the oil and gas ups...


Impact Analysis
Winning / Losing Sectors

Total 59 | Refresh

Pharmaceuticals

15:58 Excise Rate Cut; +ve for AIDS Drug Cos:PwC, Sun Pharma, Cipl...

Sun Pharma 1127.20 -24.45

Cipla 257.60 -3.15

Engineering - Heavy

15:39 Biodiesel duties reduced; Praj in focus

BHEL 2100.50 -85.8

Suzlon Energy 98.80 -8.05

Cigarettes

15:38 Duty on Paper paperboard retained at 4%; +ve ITC

ITC 197.70 6

Godfrey Phillip 1243.75 18.9

59 More Reports

mpact on Sectors

See how budgets has affected various sectors


AU | Auto - 2 & 3 Wheelers | Auto - Cars & Jeeps | Auto - LCVs/HCVs | Auto Ancillaries | Banks - Private Sector | Banks - Public Sector

What's Costlier/Cheaper

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Ashu Dutt

Anchor & Producer , CNBC-TV18
(06 Jul- 16:30hrs)

UPCOMING CHATS

06 Jul Sandeep Shanbhag
07 Jul Ramesh Damani
08 Jul Mitali Mukherjee



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Budget Hightlights



Corporate tax rate unchanged

Fringe Benefit Tax abolished

Minimum Alternate Tax hiked to 15% from 10%

IT exemption limit raised for personal for tax payers

Fiscal deficit up from 2.7% to 6.8% of GDP
More Stories


BS Home /Budget - 2009




Gold import to decline further

Explaining the need for a revision in the levy on precious metals because of manifold increase in prices, the Finance Minister in the Budget 2009 - 10 doubled customs duty on import of gold and silver. Read



Budget a routine document: Orissa finance minister

Terming the Union Budget as a routine document, Orissa Finance Minister Prafulla Ghadai today said it was devoid of innovative programmes and provisions to accelerate economic growth. Read



UPDATE:NDA will oppose Union Budget for ignoring Bihar cause: Nitish

Slamming Union Finance Minister, Pranab Mukherjee for allegedly ignoring the demands for special status to Bihar, Chief Minister Nitish Kumar today said the Union Government was biased against the state. Read



I have taken risk to return to higher growth rates: Mukherjee

Finance Minister Pranab Mukherjee today said that he has taken tremendous risk to return to higher growth rates by opting for higher deficit and hoped to achieve nine per cent growth next fiscal. Read



NIA gets Rs 15 cr budegt allocations

The NIA, which came into existence in February this year with the appointment of Radha Vinod Raju as its first Director General, has to accomplish important tasks in next 100 days under the Union Home Ministry's Action Plan-II announced by P Chidambaram recently. Read



Auto shares plunge after Budget announcement

An excise duty cut on big cars failed to enthuse the shares of auto firms as the scrips plunged in sync with the broader market, which nosedived on concerns of widening of fiscal deficit. Read



Indirect tax rates unchanged, exchequer to take a hit

The government today retained the broad rate structure for all indirect taxes, which will dent its kitty under this head by 16.11 per cent this fiscal compared to projections a year ago. Read



Govt seeks to offer fertiliser subsidy on nutrients

The government today sought to shift to a nutrient-based subsidy regime to facilitate balanced use of fertilisers and bring in fresh investment to the sector. Read



Minimum Rs 30 lakh needed to be called 'wealthy'

The government today doubled the threshold for calling a person or entity wealthy, saying the wealth tax would be imposed only on those having a net wealth exceeding Rs 30 lakh. Read



UPDATE:Govt's expenditure to rise in FY'10 on subsidies, 6th Pay Comm

The government's total expenditure for the first time will surpass the Rs 10,00,000-crore mark in the current fiscal. Read



Budget speech a mix of wit, humour and words of wisdom

Quoting the sayings of medieval India's political thinker Kautilya as well as Mahatma Gandhi, Finance Minister Pranab Mukherjee today punctuated his budget speech with words of wisdom, wit and humour. Read



Govt eyes Rs 1,120 cr via divestment; to hold min 51% in PSUs

The government today announced increasing people's holding in public sector undertakings through the disinvestment programme, but said it would retain at least 51 per cent equity in these enterprises and would keep the banks and insurance companies under its control. Read



Karuna hails setting aside of Rs 500 crore for Lankan Tamils

Tamil Nadu Chief Minister M Karunanidhi today welcomed the announcements made in the Union budget including allocation of Rs 500 crore for rehabilitation of Tamils refugees in Sri Lanka. Read



Higher Plan outlay in Budget to accelerate growth: Chidambaram

Higher Plan outlay in the Budget will provide stimulus to the economy and accelerate the growth process, Home Minister P Chidambaram said today. Read



UPDATE:Defence to get 34% hike in budgetary allocation

With an aim of fast-tracking procurement of defence equipment, the government today steeply hiked the budgetary allocation for defence to Rs 1,41,703 crore, a 34 per cent increase over the previous fiscal. Read



SP joins oppn in criticising Budget

Samajwadi Party, which is extending support to the government, today joined the opposition in ridiculing the General Budget, terming it as "sour", "trepid" and "unimpressive". Read



Big push for rural development projects in Union Budget

Giving a push to its rural development projects, government today announced a 144 per cent jump in the allocation for the flagship job guarantee scheme, NREGA, and 45 per cent hike for the Bharat Nirman programme that seeks to improve infrastructure in villages. Read



UPDATE: BJP dubs Budget as unimpressive

BJP today dubbed the General Budget as timid, tepid and unimpressive while the Congress hailed Finance Minister Pranab Mukherjee for doing an "excellent job". Read



Budget reactions: Realty sector hails plan to hike in infra spends

We / Ansal API welcomes the budget announced today in Parliament by our Hon’ble Finance Minister. On the whole, the focus of the aam aadmi has been maintained with the introduction of subsidies and grants for education, employment and self help groups. Also, the move to decrease the level of poverty is key to India being mentioned in the same breath as the developed nations of the world. Read



UPDATE:Budget seeks to minimise impact of global recession: PM

Prime Minister Manmohan Singh today said the Union Budget 2009-10 is aimed at minimising the "impact of the global recession" and achieving 8 to 9 per cent growth in the medium term. Read

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India Inc welcomes Budget with reservations

I rise to present the Budget for 2009-10 read
Regret hike in MAT, and continuity of STT; happy with removal of FBT

Full Story

Govt raises MAT to 15%, abolishes Fringe Benefit Tax


FBT, listed companies to save Rs 2,100 cr


I-T exemption limit up for general taxpayers, senior citizens


Govt scraps CTT; commodity bourses hail move


Defence to get 34% hike in budgetary allocation
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Budget News

UPDATE:Fiscal deficit to widen to 6.8% as stimulus continues
Crop loan at 6% interest for farmers
Govt to introduce Food Security Bill soon
I-T exemption limit up for general taxpayers, senior citizens
Govt scraps CTT; commodity bourses hail move
Govt seeks to offer fertiliser subsidy on nutrients
Govt raises MAT to 15%, abolishes Fringe Benefit Tax
Registering at one employment exchange will be enough
More Stories

Budget Reactions

Sensex plunges; down 220 points
UPDATE:Budget seeks to minimise impact of global recession: PM
India Inc welcomes Budget with reservations
UPDATE: BJP dubs Budget as unimpressive
Budget fails to cheer market
Tech firms happy with tax benefits, FBT removal
Budget fails to address economic challenges: CPI
SP joins oppn in criticising Budget
More Stories

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http://www.thehindubusinessline.com/budget09.htm

Union Budget 2009




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Highlights of Union Budget 2009-10

* Govt plans to bring back economy to high growth of 9%
* GDP growth dipped to 6.7% in FY'09
* FM to make pre-budget talks with state FMs annual affair
* Fiscal deficit up from 2.7% to 6.8% of GDP
* Return to fiscal prudence at the earliest
* 'Aam admi' is focus of all programmes and schemes
* IT exemption limit raised; Rs 15,000 (rpt) 15,000 for Sr.Citizens
* Limit raised by Rs 10,000 for tax payers, including women
* 10% surcharge on personal income tax scrapped
* Fringe Benefit Tax abolished
* No change in corporate tax
* Defence gets Rs 1,41,703 cr, up 34%
* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr
* IIFCL to evolve mechanism for increased funding of infra
* IIFCL to re-finance commercial bank loans up to 60 per cent in critical
projects through PPP to tune of Rs 1,00,000 cr
* Allocations for highways being stepped up by 23 per cent
* Funds for housing, amenities for urban poor up Rs 3,973 cr
* Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr
* Assistance for storm-water drainage project up by Rs 300 cr
* Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr
* Interest rates incentive to farmers to repay loans on time
* Additional Rs 1,000 crore for accelerated irrigation scheme
* Export Credit Guarantee scheme extended till March 2010
* 2% interest subvention (IS) scheme extended till March 2010
* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.
* Commodity Transaction Tax abolished
* New pension system trust exempted from STT; DDT
* Minimum Alternate Tax hiked to 15% from 10%
* Tax holiday on petro sector extended to natural gas
* 100% tax deduction on political donation
* Stimulus for print media for another six months
* Fertiliser subsidy to be nutrient-based, not price
* Expert Grp to form viable pricing for imported petro goods
* Banks and insurance firms to remain in public sector
* Rs 100 cr one-time grant to expand banks in unbanked areas
* Govt committed to provide Rs 100 a day as wages under NREGA
* Allocation of Rs 39,100 cr to be made for NREGA
* NREGA coverage increased to 4.74 crore households in FY'09
* Work National Food Security scheme has begun
* Allocation for Bharat Nirman being raised by 45 per cent
* Rs 2,000 cr rural housing fund under National Housing Bank
* Mission for female literacy with focus on minorities, SC/ST
* 50% of all rural women to be brought into SHG programmes
* Full interest subsidy for students in select institutions
* Five lakh students to benefit
* Modernisation of national exployment exchanges
* Action for social security to unorganised sector workers
* New pension benefits for 12 lakh jawans and JCOs from July
* One lakh dwelling units for paramilitary forces personnel
* Unique Identification Card to citizens in 12-18 months
* Provision of Rs 120 crore for UIC project
* Rs 2,113 crore allocated for IITs and new IITs
* Rs 3472 cr for Commonwealth Games from Rs 2112 cr

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Mkts slide as FM sees FY10 fiscal deficit at 6.8%


The benchmark indices were seeing huge selling pressure, despite buying interest at lower levels. FM kept FY10 fiscal deficit at 6.8% as against 5.5%. Capital Goods, metals, banking, oil & gas, FMCG and technology stocks declined.

The Sensex tanked 282 points, to 14,630 and the Nifty lost 95 points, to 4,329.

Finance Minister on Union budget:
-GST from April 1, 2010
-Increased allocation to commonwealth games, which will be positive for DLF, Unitech and hotel stocks.
-ICT allocation increased to Rs 900 crore, Educomp will be benefited.
-Increase in outlay in defense; positive for M&M defense
-RGGVY (viduytikaran yojana) allocation; positive for ABB, Areva, Crompton, Siemens, BHEL, Voltamp, Indo tech
-To allocate Rs 2000 crore for rural housing funds in national housing banks

Finance Minister Pranab Mukherjee is presenting this Budget against a backdrop of muted expectations from Dalal Street. In the run-up to the budget traders had cut down their positions. Institutional investors also have been keeping a low key over the past few days.

Since the UPA government came to power the markets have moved up 22% (Sensex was at 12173.42 before the election results) amid hopes that some crucial reforms may finally happen. CLSA in its report has said that a ‘normal’ budget could trigger a market correction given high expectations. Historically stocks tend to correct or move in a tight range soon after the budget.

On the next page - see how Indian markets performed in the last one hour



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**********************************************************INSTANT VIEW - Budget hikes spending, deficit 6.8 pct/GDP‎ -

INSTANT VIEW - Budget hikes spending, deficit 6.8 pct/GDP

Mon Jul 6, 2009 2:05pm IST
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NEW DELHI (Reuters) - The new government said it will hike spending to spur growth, pushing the 2009/10 fiscal deficit to a much higher than expected 6.8 percent of GDP, slamming local stocks and pushing bond yields higher.

Financial markets had been expecting the fiscal deficit in the 2009/10 budget unveiled on Monday to rise to as high as 6.5 percent of GDP, from a previous government target of 5.5 percent.

The government's gross market borrowing is expected to rise to 4.51 trillion rupees, versus 3.95 trillion rupees in a Reuters poll.

Finance Minister Pranab Mukherjee pledged the government would return to fiscal responsibility targets "at the earliest". He also vowed to return the country to a higher growth rate of 9 percent a year as soon as possible, from an estimated 6.7 percent in 2008/09.

Total spending in the 2009/10 budget will rise to 10.2 trillion rupees, up 36 percent from 2008/09.

India's BBB-minus sovereign rating, placed on negative outlook in February, does not face any significant rating pressure, Standard & Poor's analyst Takahari Ogawa said after the budget was released.

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OTHER KEY POINTS: Continued...










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