The Interim Budget did not offer any sops which keeping in line with the convention is correct. However, the statements made by the Finance Minister during his speech were totally contradictory. As a consequence the markets have reacted quite adversely.
A major cause of concern will be the mounting fiscal deficit which is expected to touch 6% of GDP. This is going to have an extremely negative impact on the cost of borrowing, which will in turn have serious repercussions on Corporate India. At one side there is a need to reduce interest rates to propel growth but on the other hand the Government borrowing program just does not seem to end. To add to that we have the costs associated with the implementation of the sixth pay commission.
With Elections round the corner and no major policy decisions expected, we are all in all heading for tough times ahead, atleast for the next 3-6 months. Markets will be extremely volatile and will have a more downward bias. In the last two days itself the Sensex has lost upto 600 points; due to this heavy sell-off 155 BSE stocks have touched their 52-week low including many ‘A’ group stocks.
In this issue we thought of going back into the last year and see what we need to learn and avoid in the future. We hope to have covered some important learning experiences.
Click Here: Lessons from 2008
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