With less than ten days to go for the Union Budget 2012-13, there is widespread hope that the Government will do all it can to improve sentiment. Given that the economic slowdown is investment-led, there is a demand for big-ticket reforms to incentivise investments. The Budget is also the last chance for Government to come up with a fiscally responsible package as next year's edition is likely to be a populist election-year Budget.

Another fiscal stimulus is difficult this time around, given the messy public finances. But all eyes are on the gross tax collection performance, which is likely to miss the 18 per cent growth budgeted for the fiscal.

Excise collections so far have clearly lagged the estimates. The picture is not comforting on the corporate tax front either, though the March 15 instalment of advance tax could bolster revenues. Still, achieving the budget estimate will be tough ask, say economy- watchers.

To turn the sentiment from a slowdown in investments, policy incentives are required in addition to an easy monetary policy, said a research note prepared by Religare Capital Markets.

A Standard Chartered Bank research note said investors will pin their last hopes on the Budget, given that the pace of policy reforms is unlikely to get a fillip from the recent State election results.

Pending reforms related to foreign direct investment in multi-brand retail, airlines, insurance, land acquisition and mining could be delayed again, exacerbating the supply-side bottlenecks, the research note added..

> krsrivats@thehindu.co.in

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