Sectors catering to rural consumption demand, education, housing, infra and lending will benefit, given the FM’s mandate to facilitate growth in the hinterland. Here are the sectors, impact of Union Budget 2013 on them and their concerns along with the top trading picks for investors…
Budget 2013 Not with standing an alleged inflation-growth trade off, high inflation and low growth have bedevilled the Indian economy for more than two years. The fact of the matter is some of the same factors are behind high inflation and low growth. Addressing these factors is crucial to the success or failure of the forthcoming Budget for 2013-14 and RBI’s Monetary Policy Statement. Key to understanding the current situation is the sharp (but different) drops in saving and investment which have not only lowered economic growth but exacerbated the current account imbalance and fiscal deficit.
The large improvement in domestic savings from 26.5% of GDP in 2001-02 to 36.8% in 2007-08 is largely attributable to fiscal consolidation, i.e., additional public savings. About half of this gain has been eroded largely through fiscal stimulus in response to the global financial crisis (2.1% of GDP between 2007-08 and 2010-11 and an estimated 3.2% in 2011-12). There was a compositional effect as household savings in gold and real estate increased dramatically, essentially to hedge against inflation. Prices of both these assets are subject to bubble type effects. If any of the bubbles burst, there could be negative wealth effects…
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