As it is a last budget before 2014 elections the budget of this year would be very crucial not only for the commodities market, but also for other financial markets and for the economy of the country as a whole. The most important number the world will be watching out for the budget 2013.
Many believe that the Finance Minister may tinker with the tax rate structure of 10-20-30 percent as the demand for taxing super rich is at high (which is also reflecting in the current poll of the CCI).
Despite of the cabinet's decision to allow oil companies partial freedom in pricing products, the oil subsidy projection in budget 2013/14 is going to be a hard exercise.
The finance minister has to take in to account international pricing trend of crude oil and also guess the extent to which politicians will allow oil companies the freedom to set prices.
On the other hand, since he has been taken up on his promise that he will bring down the fiscal deficit to 5.3 percent, P Chidambaram cannot afford to disappoint the markets and global investors. But it is the opinion by the different experts that Mr. F.M. real fiscal deficit will miss target by a mile.
In other words, Mr. F.M. can do his own math in the budget and there is no reason to not accept it. But it is clear that the data currently available does not support the finance ministry optimistic projection of 5.5 percent GDP growth.
In this regard, just I would like to add that there are several ways in which this can be done which showed by our Current President of India (Mr. Pranab Mukherjee) in the last year.
Beside this, as per the opinion of market experts gold should have been sold before budget as the budget is expected to be not Bullion friendly. In this regard, I would like to share that the demand for gold in 2012 was due to overall economic slowdown.
Adding fuel to the fire there could the introduction of Commodity Transaction Tax. As a result of which the cost to transport in commodities may be much higher.
The introduction of the concept of negative list regime in the budget 2012 was a major step by the Central Government towards the Goods and Service Tax (GST). So, this time we are all expecting the introduction of the Act. And we believe that this could reduce taxation procedure difficulties to a greater extent.
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