Sudip Bandyopadhyay

When the British Tea Companies introduced tea for the first time in India, they used to put up stalls at public places and provide the hot beverage free of cost. The purpose was to acquaint Indians with the taste of tea and hence an elaborate attempt was made to ensure that every middle class Indian got the taste of tea free of cost.

To introduce a concept not widely popular is a huge challenge and the success of such a gamble depends on , apart from the quality of the product / services, the efforts taken to popularise & market the concept. Indian Financial markets are ripe for change . 34 per cent of our GDP gets saved & out of the savings, 55 per cent sits in bank deposits. Equity investment only constitutes 4 per cent of the savings with only 9 million depository accounts in a country with a population of 1 billion. Long term wealth generation can only happen through investments in equity either direct or indirect & hence the financial landscape has to change.

Reliance Money for the first time in the history of financial markets in India tried to take the Equity Investment culture beyond the metros and mini-metros of the country to the tehsils and talukas. To popularize Equity Investments, Reliance Money introduced a brokerage fee trading facility against payment of a very small amount of Rs. 500/- per year for a turnover of upto Rs5 lakh. Customer was provided access to a complete financial portal providing news, views, research and all market information on a 24 x 7 base with the facility to trade online in Equities and Commodities. Customer also was provided online access to Mutual Fund Investment and redemption. All these at a price which was in effect costing him less than Rs. 42 per month. This was affordable, accessible and safe/secured.

Customers also have the option of online chat, call & trade, trade through franchisees across the country. Equity investment has been made really convenient & cost effective.

“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, …. lest Rome become bankrupt.” - Cicero - 55 B.C. These guiding principles laid down way back in55 BC, still holds a lesson for all of us.The current year’s budget has provided some SOPs for the “Aam  Aadmi” by removing surcharge on Income Tax, providing slightly higher tax exemption limits and few such other measures. But the capital markets were clearly disappointed with  the budget as the sky-high expectations were clearly not met. The deficit reached upto 6.8 per cent of GDP and no measures on FDI opening up   or PSUs disinvestment was talked about.  Consequent upon the above, the significantly higher expected government borrowings is likely  to create havoc in the money market resulting in crowding out of private sector borrowings and eventually end up pushing the interest rates in the economy higher.
.
__,_._,___
The impact of union budget on the common man can be discussed at two levels i.e, what  he directly feels or notices and the other  which he misses on the face of the document  or doesn’t feel directly.  While the first one impacts him and or affects his sentiments immediately, the second one is the  real long-term impact generating proposition. Aam Aadmi may not have been very happy with this year’s budget at the first level.However, a careful scrutiny of the economic environment of India and the global economic scenario very clearly points out that the Central Government’s emphasis on infrastructure and inclusive growth are absolutely appropriate.  India can move to the next orbit of growth and create a virtuous cycle of prosperity only by drastically improving it’s infrastructure and providing growth opportunities to the masses thereby reducing the income disparities and social tension.  Large government spending also provides the necessary growth stimulus to the economy as a whole and facilitates industrial recovery.

In a situation where credit markets world over are still in a state of inaction, the Government has very little choice but to try & directly start spending for infrastructure creation & inclusive growth.
On the whole, a careful study of the budget in the context of the present economic realities, very clearly indicates that the government has been extremely pragmatic while drafting the budget.  Of course, concerns remain regarding financing of the huge deficit.  However, if the same can be financed through PSU dis-investment, etc.  the pressure on the money markets would reduce. Selective opening up of FDI restrictions will also provide the impetus for accelerated growth.  All of these need not be spelt out in the budget document and can be done effectively out side the budget over a period of time in a prudent manner.