Most market participants believe that if the Budget takes reforms forward, it will be good for the market. But when it comes to specific ideas, the consensus starts fraying at the edges.

A snap survey of nine market participants conducted by Business Standard showed that not all reforms are market-positive.

Respondents -- all of them senior executives of brokerage houses, mutual fund managers or financial sector intermediaries -- were asked 17 questions relating to possible Budget proposals and told to indicate whether the measure would be positive for the markets or negative. For example, one question was about whether the replacement of capital gains tax by a turnover tax would benefit the markets.

Most agreed it would be reforms of a kind, but it may not have a positive impact on the market.

The respondents said seven of the measures, if they find a place in the Budget, would be market-positive; five would be negative; and the remaining five would be market neutral.

The reforms/measures on which there was broad agreement were further progress in the shift to a value-added tax regime, expansion of service taxes, lower corporate and personal taxes, sale of losing public sector undertakings, across-the-board cuts in customs duty and opening up infrastructure for greater private and foreign participation.

Even a cess to raise resources for education was seen as market-positive.

On measures that would be disliked by the market, the list went like this: higher fiscal and revenue deficits, higher allocation to anti-poverty schemes, increases in non-targeted subsidies, pressure on banks to lend more to priority sectors, and an increase in freight rates in the Railway Budget.

On the five remaining questions, the respondents were divided -- with some saying they may be positive and the rest that they won't be.

The replacement of capital gains tax with a turnover tax fell in this category of divided votes. Amitabh Chakraborty, vice-president and head of research at Kotak Securities, said that a turnover tax "would be a progressive step from a broad perspective but it will be viewed negatively by day traders."

Other possible proposals on which the market was divided were: higher allocations to agriculture, reduction in income tax exemptions, increases in upper class fares in Laloo Yadav's Railway Budget, and allowing more public sector units to raise money through initial public offers while retaining government control.

Chakraborty said that higher allocations for agriculture, anti-poverty programmes and increased social sector spending by levying a cess could be seen as long-term positive measures, but a lot depended on "how it is done."

Other respondents, however, said that too much spending on agriculture and anti-poverty schemes would have a negative impact on the markets.

The reduction of income-tax exemptions, or its total abolition, were viewed by some as anti-reform measures while others saw it as pro-reform but negative for the markets in the short- run.

Most respondents were in favour of seeing a wider list of public sector units making it to the market, but there was no consensus on whether the government should retain majority control of these entities.

The head of a leading brokerage said: "I am not happy with the idea of the government being a major stakeholder."  The sale of loss-making PSUs got the thumbs up from all those who were polled. An increase in upper class rail fares was classified as immaterial by all those polled.

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