Balasubramaniam, CEO, Birla Sun Life Asset Management Company

Budget expectations are building up among all of us. However, it is also going to be a toughbudget in terms of achieving a fine balance between growth and fiscal. Many challenges havebeen posed to the Government affecting the overall performance on economic activities due towhich the expectations in the market place is also low.
Some of the obvious changes expected this time could be the reversal of fiscal stimulus thatwas given during the 2009 budget in the form of excise reduction. However, this reversal ofexcise duty needs to also get aligned to the GST proposed tax regime. There are lots of cessattached to corporate tax, we believe, these may be reduced so as to reduce the corporatetax rate as well as to prepare the tax structure to GST proposed regime. Given the high foodinflation, there is a likelihood of food security tax and subsidy to be close to Rs 80,000 crores.
The other social welfare programme of the current Government such as NREGA will continueto be the focus as the programme has been a major success benefitting large pool of publicat the rural market. We believe this expenditure continued to be tagged at about Rs.40,000crores. In the recent past, there has been pressure on Oil prices thus posing threat for Oilsubsidy as well as fertilizer subsidy going up. The amount towards this could be in the range ofRs.26,000 and Rs.80000 crores towards fuel subsidy and fertiliser subsidy.
Non tax revenue for the current year has been one of the best ever in the history of India Incthrough sale of 3G License as well as select PSU disinvestment. We believe this will continueand there is likelihood of generating Rs.40,000 crore from PSU divestment though it is not atthe same order as this year.
However, Budget may attempt to increase non-tax revenue through changing tenderingprocess in sectors like Power, Road and other such infrastructure projects. Given the constraintto the Government in overstating the revenue target in the coming fiscal, we believe overallfiscal deficit would be maintained at around 4.80% translating to a total borrowing estimate ofroughly Rs.4,30,000 crores at gross level.
There has been a need to create a vibrant corporate bond market; however this needs a changein taxation structure for overseas investors. Given the current need to fund infrastructureprojects, we believe Government would favorably alter the TDS on interest payment to attractglobal flows into Indian Bond market. As it is FDI and FOREX flows are the key for the comingyear given the current account deficit. Therefore, in our view, the Budget will bring in focus asto how to get funds to fund the massive need of infrastructure sector either through openingbond market or through introduction of amnesty scheme. As stated in the recent monetarypolicy, Budget will bring focus in monitoring expenditure towards productive asset creationthus increasing the capital formation in the system in building capacities.