Interim Budget Preview (IDFC SSKI)

Interim Budget FY10 Preview

With all eyes on the interim budget to be announced next week, we expect the government to remain committed to its agenda to pull through a sagging economy. However, the government will have to walk a tight rope between its conflicting agendas of priming growth while keeping an eye on the ballooning deficit. The FY09 revenue projections are looking aggressive in a changed economic environment. We see net tax revenues falling short of budgeted estimates by ~5%. With lower growth likely to continue through fiscal 2010, impacting personal incomes and corporate earnings, we expect direct tax collections to decline by ~4%yoy for the fiscal year. Indirect tax collections are already under pressure on the back of a series of duty cuts (for excise collections) and lower prices of commodities and goods (for customs duty collections).

To see full report: Budget Preview