Indian Economy Slightly Better Poised than other Emerging Economies

THE WORST ever financial crisis to have ravaged the United States since the Great Depression of 1930s, has taken a heavy toll on the world’s largest economy. There is rise in the number of job layoffs and cost cutting. In fact, all the economies of the world are facing crisis to tackle this global meltdown. The meltdown has led to shock waves across the world, with economy after economy gasping for breath to survive this financial tsunami.

Citigroup on Monday (November 17), decided to lay off 53000 employees in the coming months and slash its expenditure by 20 per cent next year. The measures are part of the Citigroup’s efforts to overcome the huge losses it has suffered in the last four straight quarters, including $2.8 billion in the third quarter.

Recently, HSBC announced its plan to shed 500 jobs in Asia, following the slump. The bank decided to trim its work force because of ’organizsational changes in a number of areas as well as the deteriorating economic conditions and our cautious outlook for 2009’, Peter Wong, an executive director for Hong Kong and China, said in an internal message released by the bank. Now DLF has also frozen few of its plans and has cut down few jobs as well. “We must have laid off some employees somewhere,” DLF chairman KP Singh told reporters on the sidelines of India Economic Summit, but did not give the number of jobs that were cut.

Our finance minister has maintained that India will not be much affected by the recession but the fact remains that Indian Inc are getting hit by this slump worldwide. The stock market in the country has crashed in last few months.

The Sensex fell 353 points to end at 8,937 levels while in the broader markets Nifty closed lower by 116 points at 2,683 today. The investors have been dampened by the global recession and corporate layoffs. Investors are discomforted by news, the financial sector is still struggling. The entire world seems to be sinking into recession. Indians all over the world are very susceptible to the recession and are living on edge. There are hardly any new jobs available in the market and retaining one’s job can be considered to be a luxury.

There is no doubt that if the global economies suffer then India is also bound to suffer. But the very fact that India is a domestic consumption- and investment-driven market where contribution of exports to the growth is not as big goes in its favour to tackle this crisis in a much better way than few of the other emerging economies. The inflation rate has also reached in some what comfortable zone and thus economists believe that the government has more room now to focus on the growth rate of our economy.

G7 nations vow to stop financial crisis

The world’s seven largest economies finance ministers and central bank governors met in Washington and have agreed to do whatever they can in order to tackle the financial crisis which has spread and threatens to take the entire world into recession.
The G7 countries were in agreement that the current financial meltdown all over the world called for ‘urgent and exceptional action’ and that governments would “take all necessary steps to unfreeze credit and money markets”.
It isn’t just the G7 countries that met, even the International Monetary Fund and the World Bank also met on the weekend to be able to find a solution to this crisis. The financial crisis that first engulfed America has now spread to parts of Europe as well as Asia.
The sub prime market crisis which hit America has now caused losses worth almost $200 billion to the top banks of the world. The effects of this crisis are now being felt all over the European markets. The stock markets of the world are on the downslide including the Indian stock markets. The G20 countries that comprise of the twenty most developed countries in the world also met on Saturday to be able to come up with a solution for the crisis.
What started as the subprime mortgage crisis in America with Lehmann Brothers, one of the largest investment banks of America went bankrupt and Merrill Lynch was sold to Bank of America. Morgan Stanley and Goldman Sacchs became retail commercial banks and dropped investments. All the countries in the world are expected to face less growth this year as all the economies of the world are going to be hit hard by the financial crisis, and some countries may slip into recession.
The G7 meeting occurred at a time when there is gloom all across the world and there was a feel in the market that the G7 block would not be able to find a way to stem the crisis which now seems to have spread beyond America and Europe. The government in America passed a $700 billion package to save the economy of the country. Britain also followed suit, it is expected that Germany will also be releasing a similar plan in the coming days on the lines of America and England. All the meeting ministers affirmed that they would supply public funds to banks which would be on the brinks of a collapse. But there was no common solution that emerged after the meeting. Thus the countries were not off the opinion that a single common solution taken by the G7 blocks could help reduce the financial turmoil. Defending their stand, the G7 block opined that people would be naïve to think that seven different countries facing a different set of problems having a different economy structure and political system would be able to come with the same policies in order to curb the financial crisis.
The international monetary fund too expressed its concern saying that the global growth for the current year could not be expected to cross three percent. Amidst the financial turmoil over the world, the Indian growth rate can also be expected to come down from figure of eight plus percent. The G7 countries have all shown a resolve to do whatever they can to stop the financial crisis. It waits to be seen whether their resolve and plan of action will be able to have a calming effect on the markets worldwide.

Morgan Goldman drop all investments

In what may be the defining moment of banking in America, Morgan Stanley and Goldman Sachs- the last of the two largest surviving banks in America decided to abandon all investments and become bank holding companies in order to remain in business.
If after the fall of Lehmann Brothers and the buy out of Merrill Lynch you thought that the financial crisis being faced by the American banks was over, here comes another bomb shell. The Federal Reserve in America granted permission to two of the largest banks Morgan Stanley and Goldman Sachs to drop the ‘I’ word from their operations. The two banks will now return to more old fashioned style of banking. This change of status implies that both the banks will now come under the regulation of the Federal Reserve. And hence they will have to face the same regulations that other commercial banks face as opposed to the regulations that they had to face when they were under the Securities and Exchange Commission.
But the step taken by the two banks is being lauded all across the world for it was the safest option in such times of turmoil. The Americans are in the midst of a subprime mortgage crisis which started more than a year back and this is the crisis that swallowed the likes of Lehmann brothers as well as Merrill Lynch, though AIG was bailed out by the American government. The move will ensure that both the banks get to build up cash and deposits and even go forth and buy smaller banks. As an investment bank, the two had continually relied on borrowed money rather than just deposits but in the financial crisis that the country is facing right now, borrowing money was not all that easy. The move also means stricter regulations from the Federal Reserve something that the two banks may not be used to. Hence they will have a certain amount of capital and will also not be free to sell and buy securities as they used to when they had the status of an investment bank.
Meanwhile Morgan Stanley is in talks with Mitsubishi UFJ Financial Group, Japan’s largest bank to acquire a stake in it. It is expected that there will be an agreement signed that offers a stake of almost twenty percent of Morgan Stanley to Mitsubishi UFJ Financial Group. The move was taken well by the Market as well as the shares of Morgan Stanley rose 3.5 percent.
Meanwhile, it is expected that Japan’s largest brokerage Nomura Holdings will be buying Lehman’s Asian assets whereas Britain’s largest bank Barclay’s will be purchasing Lehman brothers North American brokerage operations.
Meanwhile the mood on Wall street is still somber as these were two of the biggest names in the financial market not just in America but also in other parts of the world. The investments made by the two banks in the last two years were erroneous and now have had to pay by giving up their pride. Meanwhile the smaller investment banks that can wither the financial storm right now may be able to cope up with the crisis. But from the point of view of the two banks as well as the American economy, it was indeed a pleasant move to abandon all investments. The abanks will now be able to concentrate on orthodox retail commercial banking and should be able to build on it. Moreover in the financial turmoil being currently faced by the country, it will bring in stability and safety. The two major banks may have lost their pride but atleast are still standing to be able to recover it in the future.

The New found business : Microfinance

Microfinance is a provision by which funds are made available to poor people. Its aim is to provide service to those people who are away from the main stream banks. It started as philanthropy but is slowly gathering commercial ground. The idea was discovered by Nobel Laureate Mohammed Yunus, three decades ago. The purpose was to improve the standard of living of low income groups. Nearly 70% of India’s population is untouched by formal banking system. A great business can be sensed here. Around 2500 microfinance institutes(MFI) exists in the world. They provide funds to those low income group who have entrepreneurial spirit. The funds are made available at low interest rate. Also no collateral is given for the borrowed funds. Flexibility of payment the main point of attraction. This initialization have saved many poor people from the harassment by landlords. The modulus operandi is very unique. Altruist make funds available. The group of people come together to form Non Government Organization (NGO). The NGO establishes its branches in the rural places where the funds are not easily available. Now the platform is set for distribution of money to the needy.

Five financial institution are coming together to form MFI. The move is made to tap the lowermost section of the society. Joint venture parties includes Life Insurance Corporation, IFC(a world bank wing), National Housing Bank, Standard Chartered and Union Bank of India. The new entity will be called as Financial Inclusion Corporation of India (FICI). From the past experience of being successful in funding scarce pocket of the economy, the FICI is formed to operate more efficiently and more effectively on the national scale. The successful operation of FICI will abolish the income inequality in the society. This will increase per capita income of the nation and hence raise few more million people above the poverty line.

Philanthropists have progressed the microfinance sector to its current level. Now it the turn of private sector big players in finance sector to drive the microfinance sector ahead and make it the part of the mainstream.

Narayan Murthy comes out in support of the Tatas

After Mukesh Ambani, it is Infosys founder Narayan Murthy who has come out in support of the Tatas with the agitation at Singur still carrying forward. Narayan Murthy warned that agitations are likely to deter investors from investing in West Bengal.

The head corporates of India, the men who have written some of the greatest success stories in India are all coming forward in a combined effort to express their solidarity opposed to what is happening in Singur at the Tata Nano plant.

Narayana Murthy on Sunday went on to say that the gridlock in Singur over Tata’s Nano plant is likely to be a major hurdle in the growth of the Indian economy. Murthy went to add, “What has happened in Singur is unfortunate for West Bengal, for India and for all progressive Indians,”

Narayan Murthy has always been known to speak his mind over social and economic issues. Earlier during the Anti reservation stirs all over the country, Narayana murthy had come out in defense of the anti reservationalists by saying that, “India is perhaps the only country in the world where people fight to be called backward”. At this instance too, he has come out in support of the Tatas, for he feels that it will be a great blot to India’s growth if the Tata nano project in Singur is halted.

Narayan Murthy also believed that this event would result in a dearth of jobs for youngsters in the state of West Bengal and it will deter growth in the state. He also went on to say “This event will unleash fear and uncertainty in the minds of all investors — Indian and foreign — and is likely to be a stumbling block in the excellent GDP growth India has demonstrated in the last decade,”

“It is time that all well-intentioned Indians stand up and demand a peaceful, logical and constructive way of settling the issue of farmland in Singur and elsewhere in India,” he said.

Murthy’s statement comes just a few days after Mukesh Ambani, Chairman and Managing Director of Reliance Industries Ltd said, “A fear-psychosis is being created to slow-down certain projects of national importance”. Mukesh Ambani also believed that such steps will deter the economic growth of the country and will also deter foreign investors from coming and investing in India. Mukesh Ambani had also gone on to praise the Tata Nano projects citing it as one of the most innovative projects in the World and one that would go on to establish the position of India as a small car hub in the World market.

In the entire process, the biggest loser is sure to be the state and the people of West Bengal. At a point of time, a few decades back West Bengal was one of the most industrialized states in the country. But over the years due to the policies of the Left party, this state has not been able to attract a lot of investors and come in the forefront of industrialization.

Meanwhile, in Singur the agitations and the strike led by Mamta Banerjee continue and the employees and the staff of the Tata Nano project have aborted work in the plant due to the warnings that were received by them. Ratan Tata is contemplating whether it is safe for the employees and staff to be working in Singur and Ratan Tata may decide to pull out his workers and halt the project entirely in Singur if the agitations are to continue.

The “Inflation” Effect

The United Progressive Alliance (UPA) has completed almost four years in the office. Kudos to them for providing a stable government so far. The growth rate has been approximately 8.5 per cent according to the various reports. I don’t know what exactly this term “growth rate” means, but I have observed many changes in my daily life. The change has been very significant in the last few months post that populist budget.

Surging prices of vegetable, fruits and pulses hit the common man hard while dearer steel and metals pushed the inflation to a 40-month high of 7.41 per cent, prompting the government to take more price control measures like ban on cement exports, and now may be ban on steel exports as well. “Whatever I make, must be affordable to the common man.” These were the words of Chinni Krishnan, who is acknowledged as the father of the sachet revolution in India. But is the common man’s problem being addressed in our country?

Empty WalletBeing a student and living in the hostel, I need to manage my expenses well. Previously, my daily expenditure was Rs. 100, which has increased to Rs. 150 now, despite my having cut down my expenditure on some fronts. I have to ask my parents to deposit more money in my account now. My father, who has taken a home loan, has to pay more Equated Monthly Installments (EMIs) and the return period has gone beyond his retirement. The college has increased the fees citing more expenditure. The mess fees has increased following the rise in essential commodities such as vegetables, edible oils, etc. In all, my life has changed a lot in the last few months. It is not just me; in fact, all of us must have faced the heat of rising inflation week after week. The condition of the people who depend on the daily wages is much more pathetic because they are the first and the worst victims of inflation.

Despite this growth rate, the common man’s problems are not attended to. The cup of woes of the common man across the country seems to have reached its brim, with rising prices of fruits, vegetables and other essential commodities leaving a deep hole in the pocket, forcing us to re-frame his already back bending budget.

This is an issue, which is core to the Indian government right now as it knows that the soaring inflation, if not curbed will eat away the entire success story (if any), which it has woven since the past four years, certainly something it does not need when it is going to the polls. The Prime Minister has said that the government will try their level best to curb the inflation but that has not happened till date. The government needs to curb the growing price at the earliest; else it will have to face the consequences in all the upcoming elections scheduled later this year.

This government is definitely by the people but not for the people. I say that whatever reasons the government might give for inflation but the end of the story is that the common man does not have either the time or the money to read or know about that reasons. The failure to curb price rise and inflation has been a major blot on the government totally neutralising the 8-9 per cent growth rate. As the UPA completes its fourth year in the office, the government headed by PM, Manmohan Singh, may be known more for what it has not been able to achieve rather than what it has.

Image courtesy-Icelandexpress

February 29th is more than just an ordinary day

Every four years an uninvited guest becomes a part of our Calendar. For some it goes unnoticed while the others plan something big for it. February 29th may not greet us too often, but this extra day has more to it than just an ordinary day of 2008.

For the unfortunate few who are born on this day, it means that their next birthday will fall after four years. Try explaining that to a young kid, who sees his friends celebrate their Birthday parties every year but has to wait for four long years to throw a big one. Hospitals all over India and the World see an increased number of children being born on February 29th than the other days of the year. Either it is Mother Nature’s way of playing around with the kids or it stands for really poor planning on the parent’s part. Whichever way you look at it, the poor kid will continue to resent his mom for a long time to come. Why couldn’t she just hold me for a few more hours?

In the context of our country, February 29th will stand for more than the yearly budget. Yes, Chidambaram has been at it and four years and will again come up with a people’s budget so that this government stands tall in the upcoming elections next year. An addition of a day means an addition of $2.74 billion to the Indian economy. Since Mother Nature was generous enough to make this day fall on a Friday, people would be expected to go about their daily work as they used to. Hopefully Chidambaram will not throw up anything catastrophic with the petrol or the diesel prices, so people would still be going to office without burning a hole in their pockets.

The concept of Leap years is itself a tricky one. It wasn’t something which was taught in School to us. The Leap year problems used to be the simplest for calculations. Just divide by 4 and if you don’t get a remainder than there is your Leap year. Who needs to be a Phd in Mathematics to figure that out? But throwing some light on numbers, not every year divisible with 4 is a leap year. 2100, 2200, 2300, 2500 are not leap years though they are divisible by four.

Well, the rule is that for all centuries or for the year ending with 00, it has to be divisible by four hundred to be regarded as a leap year. Hence 2000, 2400 are leap years. But 2100, 2200, 2300, 2500 are not since they are not divisible with four hundred. This is only in the case of centuries. Now if you really want to know why this strange rule, contact the people who created the Gregorian Calendar. And No, you will not find their helpline numbers on the Calendar sitting pretty on your desk.

A Leap year has an additional day but what does an additional day mean to us. For an year that has 365 days packed into it, what difference is a single day going to make? 1 day out of 365 days is just 0.0027 percent. So, probably 0.0027 percent extra income that year for employers or 0.0027 percent increase in the GDP of every country. Not very impressive.

In India, February 29th throws up a smile at the faces of all investors and economists. The Indian GDP registers its maximum growth in the first quarter that is the January-March quarter, and hence an addition of a day would imply more than a 0.0027 percent increase in the GDP of our country in a leap year. It will not be the same for a country like US, where the economy growth is in the last quarter every year that is the October-December quarter.

Thus whatever the advantages be, the fact remains that this day does not come often in our lives. Just about fifteen to twenty times in an average lifetime. Even at Target Genx, we will see February 29th making its debut. But hopefully, there will be many more such days to come. We need to make the most of them.

The Retail Rush has just begun

An industry that has caught the eye of the common man at almost every turning on the road is the Retail Industry, A young thriving population and booming consumer confidence has triggered the expansion of this sector and brought about the Retail Rush.

 The Indian economy is booming and the boom has triggered a new array of opportunities for the students as well. Post economic reforms India has become the hub of foreign direct investments. International rating agency Standard and Poors (S & P) recently raised India’s sovereign rating from speculative to Investment grade.


The crucial sectors of the economy are on a self propelling growth trajectory. The IT industry, telecommunication industry and many other industries have seen unprecedented growth during the last couple of years. But one industry that has caught the eye of the common man at almost every turning on the road is the booming Retail Industry.


A young thriving population and zooming consumer confidence has triggered the expansion of the retail sector. Till a few years back, the Indian retail market was either dominated by the apparel brand stores or the regional retail chains. But, with the entry of large corporate houses, the landscape of the organised retailing in the country has changed completely.


Despite the protests of the local ‘Bania’ the mighty ‘W’ is finally here. Wal-Mart will be setting malls in India in association with Sunil Mittal’s Bharti Group. Other international big players like Carrefour, Tesco and Auchan have also shown interest in this industry.


Indian retail industry is expected to grow at a compounded growth rate of 11% and will be a $450 billion industry by 2010. Real estate biggies have all announced huge plans to unroll malls and other retail formats across the country. The figures are mind-boggling, to say the least. DLF will be spending Rs 1600 crore on developing malls over the next four years.


Reliance Retail is planning to splurge Rs 2500 crore for opening different formats in the next three years, and the Kishore Biyani-owned Future Group, India’s largest retailer group, will be investing Rs 3600 crore in 100 stores in 30 cities, increasing its retail space from 3.5 million square feet to 30 million sq feet by 2010. Future Group also plans to have 100 Big Bazaars up and running even before Wal-mart arrives in India. Nice welcome that will be for the American giant.


The reasons for this growth are many. A booming economy coupled with a growing affluent middle class has significantly increased the purchasing powers of people. Lifestyle habits have shifted from austerity to complete self-indulgence. There is greater emphasis on personal care items and luxury goods. 

Urbanisation has lead to densely packed cities and towns which has led to the retail giants rolling out stores after stores in almost all A and B class cities in the country. Additionally, saturation of retail business in the European and other Asian markets has prompted foreign retailers to set shop in India. The dream run of the Retail Industry has thus opened vast employment opportunities for the youngsters in India.


Management graduates are in demand for Inventory Management, Brand Management and Supply Chain Management. Finance professionals are needed for accounting, cost control and analytical functions. The Retail industry is a customer oriented industry and thus the skills of HR Managers are required for training, motivation and man power management.


A large number of professionals are also needed in the marketing and sales department. Facilities management and project management require the expertise of technical professionals.


Visual Merchandising is another important aspect of retailing and creates opportunities for designers, decorators and people with an artistic background. Skilled manpower is also required for security and safety management. Moreover from an ecological point of view, waste and energy management professionals are also in demand. Thus, the retail industry has opened various avenues for graduates all across the country.


B-Schools in India too are offering tailor made courses for Retailing. The K.J. Somaiya institute of Management and the Welingkar Institute from Mumbai, MICA Ahmedabad and the Chennai School of Business are a few of the B-Schools which are offering retail friendly courses.


The organized retail industry has a work force of 1.2 million people. The retailers association of India estimates that two million people will be required in the next two years. That’s almost twice the number of people that the industry currently employs.


Even in its current size, the industry is facing a man power shortage or rather a woman power shortage. The retail industry is one of the few industries where the women are recruited in almost the same proportion as the men.


Women form only 6% of the India’s organized workplace. The retail industry hopes to better that. It has opened a floodgate of opportunities for females as they are required in large numbers for front office functions as well as sales promotion jobs including the BP0s.


In fact the industry is offering jobs to women ranging from one hour to five hours a day as per their convenience. Maternity leaves and other benefits are also being offered to the women.


The transformation that has taken place here is quite phenomenal. The evolution of retail in India is much faster than that in the US. Growth of organised retail is likely to have a positive impact not only on end consumers, but also on employment generation, supply chain efficiency, agricultural practices, sourcing from India, etc. 

The retail boom has brought about a revolution. India cannot skip it, it must accelerate through it. Of course, there are challenges ahead, like rentals, manpower, supply-chain and back-end organization.


The current state of the Indian retail sector is still in infancy as compared to the rest of the world. Modernisation of this sector represents a significant opportunity for us. Indian retailing is clearly at a tipping point.

Organised retail, besides benefiting the consumers by way of competitive product pricing and quality service, is introducing the Indian consumer to a shopping experience like never before.

There is everything for everyone, Shopping, food, entertainment and all of it under one roof. The Indian retail scenario is poised for a quantum leap. The retail industry is being looked upon as not just a harbinger of limitless opportunities for the youngsters but also as a potent catalyst in the growth of the Indian economy.

Young Engineers worried as Economy Slowdowns

THE UPSWING of the Indian economy is experiencing a slowdown and this trend might continue into the next financial year. The Indian economic boom is mainly due to the IT sector which has spearheaded it and created thousands jobs of every year. The stock markets worldwide are also down and companies from all the sectors have reported reduction in sales and profit margins.

The sensex indicates that there will be more industries that will struggle in the fourth quarter of the current financial year. But the telecom firms will beat this trend along with manufacturing companies such as BHEL and L&T.

Economy slowdownThe rising rupee, which has appreciated by 13 per cent over the past year against the US dollar, has made exports difficult, while a recession in the US market is threatening Indian software exporters who have their main clients in the US. The IT sector was always at a loss as the rupee gained in strength in the International market. The repercussion can now be felt with TCS asking its 500 employees to resign voluntarily. IT majors pass on 45 per cent of their profit margins as salary to their employees and with decrease in profit the annual increment has also gone down. The yearly increment has been reduced to seven to eight per cent against the usual 15 per cent. There will be less recruitment of freshers as well than in 2007. In 2007, the top five IT companies hired over 50,000 employees. The companies now will make use of the ‘bench’.

This trend has landed many fresh engineers in trouble. Final year engineering students who have been recruited in IT companies are worried these days. They are all asking whether their appointment letters will be cancelled. And when they will get their joining letters? Will there be any cut down in pay packages offered? The non-recruited ones will find it tough to get lucrative jobs they were hoping for earlier. Analysts say that the slowdown was expected and it is just a transition period. One need not be too worried as this recession in US may be over in a couple of years. The Indian economy has shown lots of resilience in the past and has many multifarious activities going on which provides stability against external influences. Patience is the key to this slowdown.

Budget 2008: An Overview

Budget 2008 will the fifth and final budget of the UPA government.With both UPA and NDA gearing up for the general elections in 2009,the demands to make the budget compatible with the ruling party’s political calculations are natural. Political compulsions to present a people-friendly budget will deter finance minister P Chidambaram from taking far-reaching measures.

BudgetFM will be doing everything to make the aaam aadmi happy. One of the most common demands made by the common man is that the working class should be given greater tax relief.Women want that there should be no discrimination in the tax structures based on gender.People are okay with the current taxation rates on auto spare parts,oil,cng but there should be no further increase in rates.Traditionally, the perception in the middle class has been that they are a much-neglected lot as far as getting a voice in budget making is concerned.So they are expecting that atleast this time there will be something in store for them.The disaffection of middle class can be quite dangerous for the Congress.

The government must think twice before announcing schemes like National Rural Employment Guarantee Scheme because a recent CAG report found that only 3.2% of the registered households could avail of 100 days of employment guaranteed by the above scheme between February 2006 and march 2007.It highlighted corruption, inefficiency, diversion and misutilisation of funds.So, instead of creating more and more centrally-sponsored straitjacket schemes for the entire country, the Centre should transfer funds to the states to undertake such development activities which suit the specific requirements of a particular state.

The rupee has risen sharply against the dollar with deleterious impact on exports.In the textile sector alone 1.3 million jobs have been lost as a result of declining exports.So the government should either sterilise or slow down the inflows.

Talking about petroleum sector,FM may hand out a few small concessions to the oil PSU’s.There has been no revision in petroleum prices for a year now and those in the power circles believe the Budget won’t throw up anything beyond some exemptions and tinkering in duty structure.

India is growing by 9% annually and needs a good infrastructure backbone to support the current boom in the economy.However,creating infrastructure is a long term phenomena.Infrastructure companies dont want any kind of tax holidays but want the Reserve Bank Of India to offer differential interest rate structure for them.They want that credit should be available at a cheaper rate.The current investment in infrastructure is around 5% of GDP.India needs $490 billion to touch the figure of 9% by 2012 as targeted by the government.For that the companies require two components-financial and physical resources- and both are inter-related.The main concern is physical resources and for that they require advanced technology.They require foreign tie-ups,joint ventures and more of imports.So,the budget should aim at cutting down import duties along with policies to encourage foreign participation.

Corporate India wants the government to do away with taxes like fringe benefit tax which they feel is unnecessary.Indirect taxation of goods and services should be integrated into the Goods & Services Tax(GST) plus the tax on luxury goods should be increased.Retail industry wants that service tax on rental properties should be rationalised as it is hurting them.They also want clarifications in the FDI-related issues.ITeS and outsourcing sectors are expecting that once again they’ll not be brought under the service tax net.

The hospitality industry wants the government to increase the budgetary allocation for tourism.They want that the recent tax holiday incentive granted only to hotels coming up in the NCR region be extended to all categories of hotels.

The Budget could be more populist than the earlier Budgets of Mr Chidambaram, given the Congress needs to spruce up its voter base in the wake of losses in recent state elections.

But,the need of the hour is to take firm and bold steps to control fiscal deficit,rein in inflation,provide growth impulses to the faltering economy and take steps to face global recession.