Setting at rest speculation about the fate of the general budget, Union Finance Minister Pranab Mukherjee said on Monday it would be presented only after the completion of Assembly elections in five States.
Talking to journalists here, Mr. Mukherjee said the government had not yet decided on the date for presentation of the budget, but it would naturally be after the Assembly polls. The announcement of the Assembly election schedule in the five States between January 30 and March 3 had raised the possibility of rescheduling the budget for 2012-13.
As per the schedule worked out by the Election Commission, the last day of polling will be March 3 in Goa and counting of votes will begin on March 4. The general budget is usually presented on the last day of February every year.
Mr. Mukherjee will hold brainstorming sessions with various stakeholders during his annual pre-budget meetings beginning January 11.
Investment in equity market
In a related development, Department of Economic Affairs Secretary R. Gopalan said the decision to allow foreigners to invest directly in the equity market would encourage long-term investment in the country and reduce dependence on FII hot money. “This is a very significant step. We were looking at how to increase inflows in the market. The good thing is that unlike FII money, which is deemed to be hot money, people will put money in this for a longer period of time,” he told journalists here.
He described the latest step as a way of creating an enabling environment for Qualified Foreign Investors (QFIs) to come into the market and take part in equity. The move comes in the backdrop of significant foreign capital outflows from the domestic equity market in recent times, which has resulted in rupee volatility.
Amid severe volatility in the capital market last year, Foreign Institutional Investor (FII) outflows amounted to more than Rs. 2,700 crore. The situation had an impact on the rupee, which fell to an all-time low of to Rs. 54.30 on December 15. Fluctuation in the domestic currency has put pressure on policymakers and the country's import bill.
