General expectation from the budget?
We expect the budget to be a tight rope balance on the fiscal deficit side. As per the fiscal deficit reduction roadmap the deficit is to be cut to 4.8% of GDP. Higher claims on subsidies (food, fertilizer and oil), pressures to increase social spending in the background of several state elections and absence of one-offs like the 3G bounty (which accounted for almost 1.3% of GDP in 2011) would be challenges the finance minister has to contend with. One way of increasing revenue would be to normalize the reduction in excise duty and service tax to pre-crises levels. Possible increase of 2% on both these accounts can be expected in the budget. Another source of increased revenue would be increasing MAT rates to align with the 20% rate proposed in the DTC bill, 2010. Buoyancy in tax revenue would continue due to sharp increase in nominal GDP growth. Given that this would be the last year of the current 5 year plan there would be limited room for pruning plan expenditure growth. On the non-plan expenditure side interest payments and defense expenditures account for around 50% and scope for reduction here is limited. Given the high global commodity prices and rising oil prices, the subsidy bill also would be substantially higher next year. In this backdrop containing fiscal deficit to 4.8% of GDP would be an arduous task.
 
What kinds of measure are required to boost the prevailing market condition?
The speed of the reforms process has perceivably slowed down in the recent past. Market participants would look for measures that indicate the government’s resolve to continue with the reforms process. One such measure that could boost the market could be allowing FDI in multi-brand retail, defense (up to 49%) and in insurance. Other measures that would give market confidence would be the passage of several pending bills like the Mines and Minerals Bill, Land acquisition (amendment bill) etc. Fiscal deficit number of 4.8% as well as reemphasizing commitment to increase investments in infrastructure, sort out policy and procedural delays in sectors like power and road transport would be other measures that could boost the market.
 
PM has hinted certain reforms in taxation measure. Which sector do you think need to be addressed in the budget?
Reduction in the crude oil import duty and excise duty on fuels need to be addressed to buttress rising global oil prices. Infrastructure funding continues to be a big issue. There is a need to further increase the tax exemption on investment in infra bonds as well as increase the number of entities whose bonds are eligible for tax deduction. Speedy implementation of GST would also ensure more transparency and multiplicity of duties in the system. 
 
Infrastructure sector / core economy is not cooping up with the growth of the economy. Share your views…
Given the constraints on government funding, the government is expected to focus more on private sector participation or PPP in infrastructure sectors like roads, power generation and distribution and airports. However there are several bottlenecks that need speedy resolution to spur growth. Reduction in pace of project awards, land acquisition issues, environmental clearances issues, raw material linkages are some of the constraints that are resulting in slower pace of progress in the infrastructure sector. 
 
What are the ways you feel the government should to contain inflationary pressure without incurring the economic growth prospect?
Primary articles inflation has been an issue due to surging demand and supply shortage. More focus needs to be there on increasing acreage/arable land and productivity in agriculture. Focus should also be there in reducing risks due to poor monsoon. This would include promoting further and subsidizing modern irrigation techniques. While manufacturing inflation has been benign so far increasing global commodity especially oil prices have the potential to derail economic growth. Reduction in import duty on crude and excise duty on petrol and diesel would also reduce inflationary pressures to some extent.

Ramanathan K, Chief Investment Officer – Single Manager Investments, ING Investment Management India