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list Union Budget 2012-13: ‘Fiscal consolidation = Subdued growth ?’
Expectations were really never high from the budget after the recent electoral drubbing. The need of the hour was a clear roadmap for fiscal consolidation by cutting expenditure and subsidies. Instead, a slew of allocations were made to several schemes in an attempt to be populist.
list Union & Railway Budget 2011-12 Wrap Up: IIFL Research
Check how effective was the budget and its impact on different sectors
list Union Budget 2011-12 - ‘Fiscal consolidation poses major challenge’
With subsidies and expenditure appearing understated, meeting the fiscal deficit target of 4.6% for FY12 will be a major challenge.


Finance Ministers of India

Pranab Kumar Mukherjee
(1982-1985, Feb 2009-May 2009, May 2009-Continuing)

Pranab Kumar Mukherjee is a prominent leader of India National Congress. He has...
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IndiaInfoline arrow Budget arrow Industry Expectations

Union Budget 2012-13: Expectations from IIFL

Amar Ambani / 10:50 am , Mar 16, 2012

For starters, the Finance Minister is staring at an estimated 100-125bps spike in the budgeted fiscal deficit for this fiscal year. Given this challenge, the big dilemma before him is obvious – whether to roll back the stimulus of lower taxes or stay put. We would favor the latter.

Auto Sector

Expectation Probability Implications
Imposition of additional excise duty on diesel cars High Negative for M&M, Tata Motors, Maruti
Roll back of excise duty cuts Low Negative for the entire sector
Extension of R&D benefits Medium Positive for Hero Motocorp
Thrust on rural employment schemes High Positive for Hero Motocorp, Maruti, M&M

Banking
Expectation Probability Implications
Credible roadmap on fiscal consolidation translating into lower estimated government borrowings for FY13  Low Positive in general for the sector; would be highly supportive of credit growth amid tight liquidity conditions
Allocation of substantial funds (much higher than Rs60bn announced in FY12 Budget) towards capitalizing PSU Banks High Positive for PSU Banks with lower Tier-1 capital such as SBI, CBOI, etc
Some sops attached to the loan restructuring of SEBs or policy reforms in power sector Medium To partially allay asset quality concerns
Promotion of longer term bank FDs either by enhancing tax deduction limit or by lowering tenure to 3 yrs and above  Medium Positive in general for the sector; would stimulate mobilization of longer tenure deposits, also beneficial from ALM perspective 
Banks to be allowed to raise long-term funds through issue of tax-free/infrastructure bonds  Medium Positive in general for the sector; would address the ALM issues in infrastructure funding 
Increase in FDI limit for the insurance sector from current 24% to 49% Low Positive for banks/NBFCs having insurance ventures; in particular for HDFC

Cement
Key expectations Probability Impact
Hike in excise duty from 10% to 12% Low Negative for entire sector (players to find it difficult to pass on the hike)
Cut in custom duty for thermal coal from 5% to 0% High Positive for all cement manufacturers
Re-imposition of custom duty on cement imports Low Positive for all cement manufacturers
Duty structure on ad-valorem basis (without relating to MRP) High Positive for all cement manufacturers
VAT on cement and clinker be brought down to 4% Low Positive for all cement manufacturers

FMCG
Expectation Probability Implications
Increase in excise duty on cigarettes High Negative for cigarette companies. Expect marginal impact on ITC as it can easily pass on the effect of higher taxes to consumers through price hikes
Reduction in excise duty on vegetable oil Medium Positive for soap manufacturers
Abolition of excise duty on biscuits Low Positive for biscuits manufacturers - ITC, Britannia
Continued spending for development of rural sector High Positive for all FMCG companies

IT
Expectation Probability Implications
Removal/reduction in MAT on SEZ Medium Positive for IT companies with SEZ presence
Clarity on definition and applicability of taxes on the onsite portion of  revenues of IT companies Medium Positive for companies like Infosys who are entangled in such issues with the IT Dept
Dual levy of VAT and Service tax on SAAS based services Low Help IT companies with Products in their portfolios
Clear codification/transparency of transfer pricing regulation Low Will reduce litigation for IT companies in these matters

Janta's Expectations

Posted By: Riyaz Mumbai   |  Feb 26, 2013 11:03 AM
There are hints of a passenger fare hike but freight fare is likely not to be touched.
Posted By: Riyaz Mumbai   |  Feb 26, 2013 10:44 AM
WE WANT INFLATION RATE LESS
Posted By: deepa Dehradun   |  Feb 20, 2013 06:24 PM
Budget should have something for our area also.
Posted By: Nikhil Mathur Jaipur   |  Feb 20, 2013 03:57 PM
the process of price hikes from various sectors will be continue after the budget ?
Posted By: Kamini Agraval Kanpur   |  Feb 20, 2013 03:53 PM
In Budget, Mr.Chindambaram is the hero in this one act and the nation holds its collective breath as he speaks. Budget don't have to be spectacular or exciting to be significant.
Posted By: Lavanya Rastogi, President - OSS Cube Solutions Houston, Texas   |  Feb 11, 2013 01:45 PM
Be less of an Economist and more of an entrepreneur, Mr. Prime Minister Budget 2013 will come at a time, when the expectations of the aam admi as well as the business wallahs seem to be at the lowest it has been for a decade. Even the diehard optimist and “shining India” backers seem to have accepted the malaise of corruption, social chaos, circus of politics and economic policy paralysis as the New Normal for India. So much so that – any really bold or imaginary move by the bourgeoisie wisemen of GOI may actually catch everyone by surprise enough to send the ever slowing economy into an adrenaline induced shock! If there was one thing I could say our honorable Prime Minister – it would be to advice him to be less of an astute Economist and more of a visionary Entrepreneur. May be you could begin here with budget 2013: 1. Support SME competitiveness by simplifying and supporting expansion of access to credit specially in overseas markets 2. Incentive investment into R&D and Skill building in the knowledge based industries 3. Expand budgetary support for institution of higher learning with real productive partnership with the industry. 4. Make innovators feel welcome – by offering basic sops and a helping hand 5. Invest for the future – in building public institutions that will outlive your generation. As sound as economic analysis with hind sight of 20/20 may be – it unlikely that it will be nearly enough to usher in any change or stimulus with a pace of creative adaptability that the entrepreneurial India deserves so much! Mr. Prime Minister – before you finally hang up your shoes, it’s time NOW for you to choose your legacy. Do you really want it to be about many promises unfulfilled, reforms bungled and believers in you disillusioned ? Or Do you want it to be about Visionary Leadership …that ushered in the Economic equivalent of the Green Revolution? I know it seems so far back in time but there was a time no too long ago when you were credited with “architecting the economically vibrant India” …long before you even ascended to the PMO! After nearly 10 years at the helm, trust me, it wouldn’t really hurt you that much to step up to base and take a couple of courageous swings – if you connect and score a home run – that then will be your legacy, a last hurray! – one you can be proud of and one that you truly deserve. - Lavanya Rastogi, President , OSSCube
Posted By: Raju S A Dubai   |  Mar 18, 2012 02:00 PM
I do not know why we are still having the archaic system of tax rates, exemptions etc. We should just fix flat tax rates as per the income slabs. This will bring down the tax rates but might ensure better compliance.
Posted By: Manu M Surat   |  Mar 16, 2012 01:36 PM
obiously we are expecting to reach a limit of upto 5lacs Excemptions and further to go on 10%, 20% and 30%......
Posted By: M K BHAGAT BHOPAL   |  Mar 16, 2012 10:35 AM
Being a salaried person a expect to increase tax slab .The tax exemption should be 5 Lac and max tax rate shall be 20% above 10 Lacs.
Posted By: Partha Sarathi Paul Kanchrapara   |  Mar 16, 2012 08:36 AM
Being a salaried person, obviously want to get more exemption....in income tax...tax slab should be increased..as market prices is rising historically...
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