Anticipations are high as everyone awaits the Union Budget 2012-13 to be rolled out on Friday, 16th March. What could possibly be a reckoning of encouraging economic prospects; the Union Budget has everyone looking up to the Finance Minister for something positive and promising to look forward to this fiscal year.

As far as investors as concerned, according to Kotak Securities expectations are high as markets eye restoration of a fertile investment ground and a positive investment climate marked by reduced capital and borrowing costs for productive sectors.

This optimism stems largely from the vivid picture that markets have projected lately. After a disappointing 2011, markets are finally looking up and are coursing towards sizable growth. Just recently, markets accounted a staggering rise of 22% in six weeks flat, as against a fall of 25% same time last year. Moving on from a year that mottled investor confidence due to bureaucratic malevolence (marked by relative exposé of everything from scams to corruption charges) and policy paralysis, together with a stumbling global economy, 2012 is expected to reboot the investment scenario with enriched vigour and robust firewall provisions.

Prognosticating the outcome of the soon-to-be-rolled-out budget, key things to look out for in Union Budget 2012-13 include Fiscal consolidation, Implementation of the Direct Tax Code (DTC) and the Goods and Services Tax (GST), and a focused emphasis on overall growth through introduction of gen-next reforms, including, but not limited to, domestic infrastructure development as well as encouraging foreign direct investment (FDI) prospects across sectors.

For investors, this means that markets will remain on the volatile side for some more time ahead of the budget; only this time they will be buoyant and positive. The primary carter running budget propositions will be the innate longing for the government to strike a balance between aspirations of private and public sector, along with its long-drawn out pursuit of building an enriched economic outlook. Only this time, this goal will be achieved, most likely, by containing fiscal deficits, encouraging capital inflow through improved investment opportunities and reviving growth prospects to match up to modern day expectations. Thus, in many ways, investors can expect Budget 2012-13 to be pro-development, and as result, pro-investment.

The first order of duty will be to contain fiscal deficits, bringing it down to at least 3% of GDP or below. The challenge, however, will be to ascertain this swiftly and in a way that circumvents rise in inflation. It is likely that this task will entail increasing taxes, taxing more services and aggressive disinvestments in public sector units.

As far as New Tax code is concerned, everyone is hopeful that Income Tax Act of 1961 and Indirect Tax cuts will be replaced by something more relative to modern times. Finance Ministry has indicated a strong impetus to ring in new and simple tax codes in an effort to do away misinterpretations that arise from existing norms, increase tax base, improve level of compliance, and lower tax litigations. In this regards, Direct Tax Code (DTC) for new business and activities, which came much after implementation of half-century old I-T Act, is expected to simplify tax laws and include a new way to calculate taxes on income.

Additionally, to propel growth prospects, the Budget is likely to emphasize investments in the infrastructure sector, which is in requirement of investments of US$ 1 trillion in the coming five years. Also, investors can expect new policy measures and reforms, particularly those related to FDI, to be sorted out in the budget session.

All in all, Union Budget is expected to create a sense of buoyancy in the economy; one which promotes increased returns all around.

About Kotak Securities: - Kotak Securities is one of India's leading stock broking firms offering stock trading, mutual fund and IPO investing service's along with a research division specializing in Sectoral research and Company Specific Equity Research