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Union Budget
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Non tax revenue figures have little upside. Income from communication services also appears high with no 3G this time round
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While BE for tax revenues seem reasonable, the expenditure figures do not. Fiscal deficit of 4.9-5.0% looks more realistic
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A fall in non-plan expenditure and a mere increase of 3.4% in total expenditure for 2011-12 looks unmanageable
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Subsidy looks hugely understated at 12.5% lower than FY11- 38% lower for fuel, lower for fertilizers & flat 4 food as per BE!
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NREGA has been linked to CPI. Here, the Govt could have done better by addressing leakages rather than increasing the amt.
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Jain irrigation impacted with reduced custom duty on micro-irrigation equipment from 7.5% to 5%
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Cement industry will be affected badly with hike in duties
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Predictably, the budget was not able to give a detailed roadmap on GST, given the opposition from states
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Sesa Goa was the biggest loser due to hike in export duty on iron ore to 20% from 5%
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Surprisingly, hike in excise on tobacco did not come through, which is a huge positive for ITC
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SEZ developers & SEZ units will be required to pay MAT. However, this would impact only their cash flows and not P/L
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Increase in personal income tax slabs is only a sentimental positive. No real impact on purchasing power seen
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The MAT impact on cash flow and lack of action in improving the slowing FDI were let downs in this budget
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Allowing foreign investors 2 directly invest in equity mutual fund schemes is big positive from the stock market perspective
Railway Budget
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All-in-all, a negative railway budget, but it was expected to be a bad one...
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One can only hope that the railway ministry picks up pace in PPP proposals and quickly sets up a single window for such approvals.
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Overall, finances have deteriorated and the operating ratio has touched ~93%.
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No change in passenger rates along expected lines. Freight tariff was kept unchanged given the slowdown in business.
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Power & wagon manufacturing projects face land acquisition & financing issues. Material sourcing remains concern 4 projects in smaller towns
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Despite financial constraints, populist measures announced in railway budget in the light of upcoming state elections, along expected lines
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Railways target 700km line addition compared to ~180km average, which is irrelevant bcoz even last year aim of 1,000km was badly missed
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The Railway Budget sounds ambitious to state the least but given the track record, especially of last year, implementation seems unlikely
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