2010 budget..!!

Finally,the budget has been presented by the government. It has evoked mixed reactions from various stakeholders. The industry has welcomed the budget as a fine balance between growth and fiscal consolidation. The salaried class has got bonanza of about Rs 30,000 through reduction in income taxes. But,the common man has been hit hard through imposition of taxes on petrol,steel,coal etc. Moreover,the number of services under the ambit of service tax has been increased. The intention of the government to curb fiscal deficit is clearly visible but it could have been done in a better way. The government could have reduced expenditure through reduction in subsidies and improving the delivery mechanism. Time has come to get rid of the practice of issuing oil and fertilizer bonds. The announcement of GST and direct tax code was a welcome feature of the budget.

However, the budget still failed to have a clear vision. With elections 4 years down the line, the government could have been more bold with regard to various reform measures. However, it can be attributed to the compulsions of a democratic set up and the pressure to please everyone. Lets hope,the FM comes with a better one next time..!!

spectre of sovereign default..!

It appears that the financial tsunami unleashed by the sub-prime crisis had not been enough that the world is faced with possibility of sovereign defaults by countries like Greece. The debt burden on Greece is about 125% of its revenue receipts. It has sparked fears of default on its sovereign bonds. It has been well captured by rising credit default swaps on such bonds and has put heavy pressure on the euro which has depreciated against dollar in recent times. Moreover,it has made the global economic environment jittery as a default can be lethal to the fledgling world economy. Earlier ,Iceland had to face similar problems whose entire economy was on the verge of collapse. However, the crash could be avoid on account of assitance from IMF.

Such fears have already increased volatility in European stock markets . The possibility of double dip recession can't be ruled out. It is expected that other European powerhouses like France and Germany would come to the rescue of Greece as any default may shatter investors' faith and the situation might spread like contagion in the EU. We can only hope that the world economy doesn't have to face such tremors as the aftermath will be disastrous for the future of capitalism.