Advantage FM!

They say if one has to figure out where Private Equity money is headed, look for a country’s macro numbers. Fund managers would perhaps appreciate Finance Miniter Pranab Mukerjee’s pursuit of getting the math right. He is pegging the FY11 fiscal deficit at 5.5%, and is focused on getting the economy back to the pre-global slowdown levels of 9% and also figure out means to breach the double-digit barrier. He has placed a huge emphasis on infrastructure, affordable housing and education while choosing to raise a large chunk of his revenue from disinvestment and 3G auctions. In what appears to be a lesson learnt from the global financial meltdown, the FM has proposed to set up a Financial Stability and Development Council, which will monitor and maintain financial stability. Besides, he is open for the mushrooming of more new-generation private sector banks. Some of these policy directions have a huge impact on the way the economy will be steered in the coming fiscal.

What has perhaps really worked for Budget 2010-11 is that nobody expected anything transformational particularly as it comes when the global economy is just coming out of the grips of a worst slowdown. Budget 2010-11 has been the perfect case of no surprises and no bad news. In times like these, that actually translates into good news. Perhaps, everyone is just relieved that the finance minister did not rock the boat too much. Bringing growth to the pre-slowdown levels seems to be underlying theme of the Budget. What is significant is that the government wants to achieve higher growth but without losing sight of fiscal discipline. But, it might take more than conventional measures like hiking outlays to see some real action.