Expert Zone
Straight from the Specialists
Budget 2013: A rather ambitious budget
(Rajan Ghotgalkar is Managing Director of Principal Pnb Asset Management Company. The views expressed in this column are his own and do not represent those of either Principal Pnb or Reuters)
Rating agencies have left India’s sovereign rating unchanged after the 2013 Budget. A rating downgrade would mean India getting junk status which is certainly not something one would want when the current account deficit is widening.
Of course, despite our proud finance minister not admitting to letting rating agencies dictate his budget, I am relieved that the nearest and sweetest low-hanging fruit fell into his lap.
In the post-liberalisation years, I have often wondered about the diminishing relevance of the budget. India’s macro-economic challenges stem almost entirely from structural imbalances and none of these can be addressed in the budget, which is at best a summary of the fiscal impact of initiatives driven by numerous ministries. The poor finance minister bears the brunt of the limelight.
Risk factors in Budget 2013
(Any opinions expressed here are those of the author and not of Reuters)
Finance Minister P. Chidambaram has apparently done the impossible. He has brought down the fiscal deficit in the current year from the budgeted 5.3 percent to 5.2 percent in spite of the fall in revenues. What’s more, the deficit was further slashed to 4.8 percent in the 2013/14 budget. Is that realistic?
Look at the expenditure. In the current year, subsidies on food, petroleum products and fertilizer were up by 676 billion rupees or 36 percent. These are precisely the expenditures the minister had to curtail, though he did make an effort to do that too late in the day. With the jump in non-Plan expenditure, the fiscal deficit could be brought down only by cutting Plan expenditure.
Where will the rupee finally rest?
(The views expressed in this column are the author’s own and do not represent those of Reuters)
For nearly a decade, the rupee has been stable — moving in the narrow range of 44-45 to the dollar. But since August last year, the rupee began to slide and in less than six months was down 23 percent.
Dollar shock for Indian hedge funds
(The views expressed in this column are the author’s own and do not represent those of Reuters)
2011 has been an annus horribilis for Indian hedge funds. All hedge funds, with one exception, are currently in the red — the Eurekahedge Indian Hedge Fund Index was down 16.9 pct as of end-October and early reports suggest that things went from bad to worse in November.
When will the rupee recover?
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The rupee sank to its lowest on Tuesday with pressures from the market and absence of support from the RBI. The fall really began in August and in the last four months took the rupee down 18 percent against the dollar.
The fall of the rupee
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Since the beginning of September, the rupee has dropped 11 pct, most of the fall coming in the third week. That has inflated the cost of essential commodities, like petroleum products, and inflated debt servicing of external commercial borrowings. Naturally, this has raised questions. Should the RBI have intervened?
Why the rupee should harden
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The rupee has been uneasy and the stock market nervous since the beginning of this year. The two are not unrelated. For, the fall of the market has been due to absence of FII investment which also deprived the currency market of dollar supply. The outflows more or less matched the inflows and the rupee, with corresponding fluctuations, ended up in August where it had started in January.
