From the pages of Images Retail (July 2009)

Safety First
By Nupur Chakraborty and Diwakar Kumar

As the trading day began on July 6, most stock market players were predicting a bold, impetus-led Union Budget 2009-10 that would invigorate corporate and retail investors alike. But the Sensex tanked by about 870 points and Nifty by 225 points soon after Union Finance Minister (FM) Pranab Mukherjee tabled the 2009-10 Union Budget in Parliament. Industry in particular, had high expectations from this Union Budget but the FM disappointed on many fronts, though he may have been working with one hand tied by the global meltdown.

RETAIL
For retail and allied sectors, the current fiscal’s budget may be somewhat of an anti-climax. With the intervention of any other party in policy-making being minimised, many had expected a certain degree of flair and freedom to dominate the July 6th proceedings.

Some of that expected freedom may have been dampened by the fiscal deficit – at a whopping 6.8 per cent of GDP for 2009-10, and revenue deficit at 4.8 per cent (4.5% earlier estimate). GDP growth for the current fiscal has been pegged at 6.7 per cent.

Therefore, given an ongoing global economic – and export – slowdown and faced by the reality of a falling GDP growth, perhaps the FM had limited options in trying to shore up the national output.

Venu Srinivasan, president of Confederation of Indian Industry (CII), said that the Minister had met the industry body’s expectations. “The emphasis on inclusive growth would go towards maintaining domestic demand conditions, especially in the rural sector, given that external demand is still uncertain,” he said.

Chief Executive of Agri Businesses, ITC Ltd., S. Sivakumar had high expectations from the budget and those hopes have been met, with substantial spends on social and rural sectors. “With more money in the hands of rural people, the opportunity for rural retail is brighter than ever. All such products and services that improve productivity and/ or enhance rural incomes will do well,” he says.


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