The Hindu Business Line : Budget Expectations

While fiscal prudence will be attempted, we expect little change to the Centre’s fiscal deficit of more than 6 per cent of the GDP. Alternative sources of raising finances, such as disinvestment, relaxation of FDI norms, auctioning of telecom licences, etc., may be used to fund additional investments. While issues such as FDI relaxations / allowance and implementation of GST may be addressed, other critical issues, such as labour reforms, etc., may need broader political consensus. We expect material developments on the same, if any, to be outside the Budget. Tax burden on individuals may be reduced to spur consumption. Market is definitely looking forward to major reduction in STT and scrapping of FBT on employee options. Tax benefits for ‘impacted’ sectors and employment-generating sectors will be provided, in our view.

Kotak Securities

The Budget will continue to be socialistic with increased budgetary allocations to healthcare, education and rural employment. Higher fiscal and investment support to employment intensive and export dependent sectors such as textiles, leather, jewellery and other SMEs is likely. Innovative capital raising and investment schemes for infrastructure and housing (especially urban poor) may be announced. Indirect tax concessions announced previously could be maintained.

Ambit Capital

Given the fiscal constraints the government faces at the moment, any significant tax concessions or large direct government stimulus expenditure seem unlikely. However, programmes targeting rural employment generation, low cost housing, weaker sections of the society are likely to continue.

Edelweiss Capital

While there are clear green shoots, growth is still sub-par. Thus we do not immediately expect any reversal of measures announced in the stimulus packages in the UPA government’s first term. While the overall tax structure is likely to be unchanged, measures could be aimed at improving compliance, plugging leakages, a further widening of the tax net by including more services and the continuation of the process of rationalising taxes to enable the government to introduce the harmonised Goods and Services Tax (GST) in 2010. We expect reduction in the Central Sales Tax (CST) rate from 2 per cent to 1 per cent in the Budget.

Birla Sun Life Insurance

With a mandate for at least the next five years, we expect the government to tackle pressing fiscal issues through a combination of short-term revenue augmentation and long-term fiscal blueprint. We believe the government will have to stimulate investment activity through policy rather than through its own balance sheet. We are expecting a significant thrust in the infrastructure space. We recommend that investors overweight infrastructure, autos, real estate, banks and select capital goods going into the Budget.

Nomura Securities

The post-election market movement (up 20 per cent even after the recent correction) indicates that considerable expectations of economic reform have been discounted in valuations. We believe banking, housing finance, infrastructure and property sectors could be beneficiaries of the Budget, but we shall be buyers of frontline stocks in these sectors on declines. Some mid-cap stocks in these sectors remain attractively valued.

BNP Paribas Securities

More Stories on : Budget | Economy | Financial Services

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page