Online edition of India's National Newspaper
Wednesday, Mar 05, 2008
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Online edition of India's National Newspaper Wednesday, Mar 05, 2008 ePaper | Mobile/PDA Version |
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Tamil Nadu
“Loan waiver for farmers seeks to address agrarian crisis in a bold, but incomplete fashion” Stimulating consumption to kick-start a slowing economy hailed 
Focus on budget: Aman Kumar Rajoria of Standard Chartered (left), greeting S. Naren, head of equities, ICICI Prudential Assets Management, at a post-budget discussion meeting in Chennai on Tuesday. CHENNAI: While this budget is certainly an election-oriented exercise, the ruling coalition at the Centre is still sending out confused signals about the timing of the next elections, according to N. Ram, Editor-in-Chief, The Hindu. Analysing the political situation in the post-budget period at a briefing for Standard Chartered customers, he said measures such as the massive loan waiver for farmers sought to address the agrarian crisis in a bold, but incomplete, fashion. However, the impact of these measures on the UPA government’s poll prospects was uncertain. “The current evidence is against the ruling coalition being voted back to power.” Mr. Ram said the evidence of the government’s confusion was its revival of attention on the Indo-U.S. nuclear deal talks. In recent days, the government seemed to be returning to an “obsession” that it had dropped after the Gujarat election defeat. “In my opinion, it would not be wise of the Manmohan Singh government to go to the polls on this issue [of the nuclear deal],” he said. Under-utilisationAnalysing the macro-economic situation in the post-budget period, D. Sampath Kumar, Associate Editor, The Hindu Business Line, said the current political confusion might reduce the budget impact in some areas. “If there is going to be an election soon, there may be large under-utilisation of sectoral outlays in the budget,” he said, pointing to the inertia that historically crept into the bureaucracy in times of political uncertainty. He felt that the Finance Minister had crafted a budget that assumed a continued GDP growth rate of at least 8.5 per cent, without taking into account the uncertainties in the global economy. The U.S. economic crisis could push the Indian fiscal deficit up, he warned. Despite the implications on Indian interest rates and corporate as well as individual incomes, the government decided to spend money in areas that could bring political dividends. S. Naren, head of equities at ICICI Prudential Asset Management, felt that the biggest negative of the budget was its penalising of performing borrowers in the corporate sector and the resultant stifling of a healthy credit culture. It was the same attitude that lay at the back of the U.S. sub-prime crisis, he warned. On the positive side, he felt that the Finance Minister had done a good job of stimulating consumption to kick-start a slowing economy. Accordingly, he advised investors to put their money in consumer goods in the short term. As for the long term, he advised a bet on exports which were bound to boom whenever the rupee peaked in its rise against the dollar.
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