sectoral expectations from union budget 2013
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7/29/2019 Sectoral Expectations From Union Budget 2013
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Sectoral expectations from Union Budget 2013
Written by: Aditya Prasad Updated: Thursday, February 21, 2013, 12:00
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This year's Budget is critical for the Indian markets and the economy as a
whole as the Finance Minister is likely to chalk out steps towards fiscal
consolidation and policy measures to kick start activities in the infra space.
Also, road map for several economic reforms which are touted as game
changers for India like GST, DTC, land acquisition bill, FDI in insurance
and pension is expected. Following are the list of expectations sector wise.
Autos
There have been talks about additional excise duties on diesel cars whichwere mainly aimed to bring down the under-recoveries of the oil PSUs.
However, considering that the auto space, is already struggling with its
sales numbers with every passing month, an additional burden on diesel
cars will prove to be a negative for several auto companies. The next
hopeful move from this space is in the form of special schemes under
Jawaharlal Nehru National Urban Renewal Mission for the commercial
vehicle segment which has witnessed steep de-growth.
Aviation
This is one space which has been languishing for quite a few years now.
The key Budget expectation for the aviation industry is to include ATF
under declared goods and reduction in airport related charges.
Banks & NBFCs
PSU banks have been in news off late for their increasing NPAs thanks to
their exposure in stressed pockets like infrastructure, aviation, agricultureetc. Hence it is only logical for them to wish for capital infusion or
recapitalization as it will prove to be helpful in providing support to lending
activities. The other major expectation is relaxation in lock in period for
savings in order to qualify for tax benefits under Section 80C. This is to
help make term deposits more attractive and at par with other instruments
which are of tax saving nature. Related to the above point is the increase in
TDS limit on interest on bank deposits. Currently any gains of above Rs.
10,000 attract TDS. This level is anticipated to be revised higher to Rs.50,
000. Another move in the banking space is the increase in agri lending
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targets. The Government is likely to go through this announcement as this
increase will be pushed under financial inclusion. However, it will be a drag
on the PSU banks as this segment has been steadily turning into NPAs.
Increase in FDI limit for insurance companies from 26% to 49% is another
key announcement which is expected as this move will provide capital tocash strapped insurance companies.
Capital Goods
Capital Goods have been under tremendous pressures due to sluggish
capex cycle, delay in project off take due to clearances required from
various departments etc. The key expectations are as follows: In order to
provide a thrust to the fiscal consolidation stand adopted by the
Government, reduction in Government spending Budget and service tax onpower projects is likely. For the power space, fund allocation for T&D
activities are expected to continue as it provides continues business
opportunity. Also, there are hopes for some budgetary provision for
restructuring of state owned power distribution companies.
Cement
There are no major changes expected in the cement sector as the current
scheme of excise duty is expected to remain the same. Any other plus forthis space will come in the form of announcements of infra projects like
highways, freight corridors etc which will boost cement demand.
Construction
This is another space which has been in the negative over the past 12
months as spiraling commodity prices, high interest rates and inflationary
pressures have been proving a major challenge for those engaged in
construction business. This year's Budget is expected to provide some
relief in the form of dedicated infra debt bonds and tax benefits made in
infra bonds which will help provide long term funding which will give a major
impetus to the sector. Revamping the National Investment Board to ease
bottlenecks in implementing large scale projects is vital. Though a bit
stretched to wish for, MAT being abolished for the tax holiday period under
Session 80 IA to improve the viability of projects.
FMCG
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Continued focus and increase in focus of allocation of resources towards
projects like NREGA and the likes will lead to increase in disposable
income which will be a positive for this space. Implementation of GST
would be a huge help for FMCG space as this will cut out multiple taxes like
Value added Tax (VAT) and excise duties. Cigarette companies will behoping for no hike or marginal hike in excise duties on cigarettes after the
huge jump witnessed in the last Budget.
IT
Industry body, NASSCOM expects MAT on SEZ units to be removed as
this will be a huge advantage to all the companies operating in various SEZ
units.
METALS
There are not many changes expected in this pocket. The only ones being
increase in import duty on manganese ore and decrease in export duty on
low grade fines.
Oil & Gas
Oil Marketing Companies are expecting pricing of Diesel and Petrol on the
basis of trade parity rather than export parity. Also, tax holidays set duringthe 12th five year plan is another demand. Another change than can come
in this sector is the introduction of 5% customs duty on crude oil.
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