More reports on: Economy - general
Reflects unstated confidence news
Jagannadham Thunuguntla strategist and head of research, SMC Global Securities Limited
28 February 2011

When the government proposed the fiscal deficit target of 5.5 per cent  in the last year, it appeared a little unreasonable. However thanks to the additional collection in 3G spectrum it could achieve 5.1 per cent, which is great performance.

Selling assets may not be the ideal way to reduce the fiscal deficit but never the less that shows the resolve and intent of the finance ministry to keep a tight check on the fiscal deficit levels.

The road map for the reduction  of the fiscal deficit in the coming two - three years has been laid to make it reach close to the FRBM target of 3 per cent.

This is every encouraging. Global investors and capital markets are expected to take a positive view of this.

Although disinvestment in this fiscal year fell short of the target, it showed the momentum and aggression by maintaining a Rs40,000-crore target for the current year. This is encouraging for public sector public issues.

The taxation structure for the corporate sector is neutral as a direct tax loss of Rs11,500 crore is offset by an indirect tax gain of Rs11,200 crore.

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Reflects unstated confidence