User talk:KassaIndia

'Budget analysis from Economist Siddharth Shankar'

The Union Budget, on the first glance seems to have maintained a status quo with no major changes happening. I would say that the Finance Minister has done a balancing act, trying to increase revenue of the government by touching various points rather than doing a full reverse in some areas where relaxation was given. To me it seems to be quite logical and will help the industry gradually come out from the stimulus environment. Finance Minister has made it clear that the stimulus would be gradually widhtwarn as is evident from the partial increase in excise no increase in service tax rate.

I feel the minimum tax slab for personal income should have been increased in view of the rising food inflation. It is the population that is in the minimum slab that has the majory component of its income going for food and social justice would have called for a rise in that basic tax slab. The increase in the other slabs is more oriented towards improving demand of products which is good for the industry. I have always maintained that while industry is important the huge population of India is more important to ensure that the country is socially stable.

The impact of excise duty hike coupled with increase in excise duty on petrol and diesel will only add pressure on the prices and thus we must see higher inflation in the coming months. Infusion of more capital into Public Sector Banks is good as public sector banks can lend more to our basic sectors like agriculture and SME's.

To me the double digit GDP growth is not that important as has been emphasized by the FM, in a economy like India and the stage we are in, we should target a GDP growth of 7-8% and try to maintain it. Stable inflationary environment is necessary to ensure social stability and we must be willing to forego a double digit growth for that.

The view that growth must be inclusive and that the infrastructure must be given in the rural areas is absolutely correct.Structural defects in agricultural production need to be addressed. Things like 2% interest subvention for agri loans are good but I would have expected the Finance Minister to do much more for the farm sector. There has been no definitive target to increase the farm productivity.

Siddharth Shankar

Economist, Kassa KassaIndia (talk) 07:29, 20 May 2010 (UTC)

Economic note on RBI Policy by Expert Economist Mr. Siddharth Shankar
New Delhi, Delhi, April 22, 2010 -- The rise of 25 basis points my mind will have no material impact on inflation or on the growth rate of the Indian economy. The CRR hike is expected to take away Rs 12,500 cr. from the system but in reality it is not sucking out the liquidity out of the system as banks still have excess cash to the tune of 30,000 cr. I would say RBI wants to normalise policy rates in a calibrated manner and does not want to give a kind of shock to the economy. I do not think it will have any material impact on inflation. Inflation to my mind can be contained by going beyond the repo and reverse repo rates, RBI will have to increase the risk weight-ages of various asset classes to contain the formation of any asset bubble. I think RBI will need to act before the next policy meeting to increase the rates and that may happen sooner than later.

Siddharth Shankar. Economist Kassa siddharth.shankar@kassa.in

KassaIndia (talk) 07:30, 20 May 2010 (UTC)