Reflections on the Union Budget 2009-10 from Mr Kanwar Vivek, CEO, Birla Sun Life Distribution Company Ltd
 The expectations from the Budget were too high, and naturally, the gulf between the expected and the actual is the focus now. So much was expected in terms of infrastructure investments, PSU disinvestments and also tax concessions. However, if you look at the key proposals closely and that too against the current economic environment, you will find that the budget leaves enough hints of what is likely to be done on the policy front and on the ground in the coming days. This should bring relief to the markets.
The abolition of FBT and the continuation of tax benefits to STPI units (this will benefit software companies) are measures which are welcome. Tax neutrality at a time when government revenues are under pressure, and acute need for resources is felt, is probably the best that we could have hoped for and should be accepted gracefully.
The equity markets responded to the budget announcements with a slide in the index to the tune of 869 points with the sensex moving down to 14053 and the Nifty at 4165 down by 258 points. But as pointed out earlier, a re-reading of the main proposals would indicate a good foundation for future reforms.
As far as fixed income markets go the ten year benchmark yield has moved up from the 6.82 per cent levels to 7.00 per cent mark. This, again, is a response to the rise in government expenditure and the pressure which primary placements would put on the markets. Interest rates are likely to remain stable to range-bound and the fixed income markets would have a limited upside.
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Union Budget