UNION BUDGET 2009-10

UNION BUDGET 2009-10

FMCG-POSITIVE

• DUTY CUT ON LCD PANELS TO 5% FROM 10%
• CUSTOMS DUTY REDUCED ON MEDICAL EQUIPMENTS FROM 10% TO 5%.

OIL AND GAS

• TAX HOLIDAY FOR GAS PRODUCTION FOR 7 YEARS.

TEXTILE

• RESTORE 8% EXCISE DUTY ON MAN MADE FIBRE.

FINANCE-POSITIVES

• SCRAP COMMODITY TRANSACTION TAX
• EXEMPTION OF PENSION TRUST FROM STT
• FRINGE BENEFIT TAX ABOLISHED
• EXEMPTION OF PENSION TRUST FROM STT
• 10% SURCHARGE TO BE REMOVED FROM PERSONAL INCOME TAX

NEGATIVE's

• INCREASED MAT TO 15% FROM 10%
• BANKS AND INSURANCE TO REMAIN STATE RUN.

EDUCATION

• FULL INTEREST SUBSIDY FOR HIGHER EDUCATION LOANS
• THIRST ON HIGHER EDUCATION (MORE AMOUNTS ALLOCATED FOR IITS & IIMS & PUNJAB UNIVERSITY)

INFRASTRUCTURE

• 23% MORE ALLOCATION FOR NATIONAL HIGHWAY AUTHORITY OF INDIA.
• RAISE ALLOCATION FOR URBAN POOR SCHEMES TO Rs 39.73 BN IN 2009-10.
• IIFCL WILL FACILITATE TAKE OUT FINANCING FOR INRASTRUCTURE PROJECTS

MEDIA

• STIMULUS PACKAGE FOR MEDIA EXTENDED FOR 6 MONTHS.

AGRICULTURE

• TO PAY ADDITIONAL SUBVENTION TO FARMERS
• PROVIDE Rs 100 CRORES FOR IRRIGATION
• EXTEND AGRICULTURE DEBT WAIVER BY 6 MONTHS.
• PLANS TO MOVE TOWARDS NUTRIENT BASED FERTIZERS
• SUBSIDY DIRECTLY TO FARMERS
• AGRCULTURE CREDIT TARGET 3250 CRORES.

EXPORTERS

• EXTEND INTEREST SUBVENTION TO EXPORTERS IN SEVEN SECTORS BY 6 MONTHS.
• ALLOCATES Rs 400 CRORE TO INSENTIWSE LENDING TO SMALL FIRMS.

RURAL DEVELOPMENT

• Rs 100 CRORE TO SET UP BANKING SERVICES IN UNBANKED AREAS.
• ALLOCATE Rs 3910 CRORES FOR RURAL JOB SCHEMES.
• RISE ALLOCATION TO BHARAT NIRMAN BY 45%.
• ALLCOATION FOR RURAL ROAD SCHEME RAISED BY 59%.
• TO ALLOCATE Rs 700 CRORE FOR RURAL ELECTIFICATION.
• TO ALLOCATE Rs 200 CRORE FOR RURAL HOUSING.
• TO SET UP TWO HANDLOOM CLUSTER AND ONE POWER LOOM CLUSTER.

DEFENCE

• PROPOSES 1000000 HOUSING UNITS FOR PARA MILITARY STAFFS.
• TO ENHANCE PAY BACK PENSION OF Rs 1.2 CRORE
• DEFENCE SPENDING RS 1420 CRORE

BUDGET EXENDITURE AND INCOME

• TOTAL BUGET SPENDING CROSSED Rs 102000 CRORES.
• PLAN EXPENDITURE 34%, NON PLAN EXPENDITURE 37%.
• CORPORATE TAX RECEIPTS AT RS 25700 CRORES FY10

TAX-POSITIVE

• PERSONAL INCOME TAX EXEMPTION RAISED BY Rs 15000 FOR SENIOR CITIZEN, Rs
• 10000 FOR OTHERS.
• MAT CAN BE CARRY FORWARDED FOR 15 YEARS.
• IMPOSES SERVICES TAX ON CERTAIN LEGAL SERVICES
• INCOME TAX RECEIPTS AT 11300 CRORE FY10.
• EXCISE DUTY ON NAPHTHA CUT TO 14% FROM 16%.

NEGATIVE

• CORPORATE TAX REMAINS THE SAME.
• OVERALL CUSTOM DUTY REMAINS THE SAME

AUTO

• CUT IN EXCISE DUTY ON PETROL DRIVEN TRUCKS

FUND RAISING-POSITIVE

• GOVERNMENT HAS GIVEN PERMISSION THROUGH BUDGET TO RAISE BONDS OF NTPC, NEYVELI, BSNL, POWER GRID, NHAI etc GIVING MORE IMPORTANCE THAN DIVESTMENT.
• MARKET STABILIZATION SCHEME BOND BUY BACK PLAN WORTH RS 3870 RUPEES.
• AIMS TO RAISE RS 112 CRORE FROM STAKE SALES IN 2009/10.

NEGATIVE

• TO ENCOURAGE PARTICIPATION OF PUBLIC IN DIVESTMENT IN PSU. BUT ITS NOT CLEAR.
• TO CREATE AN ENVIRONMENT FOR PRIVATE DIVESTMENT. BUT NO CLARITY.
• NOTHING HAS BEEN MENTIONED FOR ATTRACTING FOREIGN CAPITAL & FM EXPECTS FOREIGN CAPITAL FLOW ONCE ECONOMY REVIVES.
• PRECIOUS METAL
• GOLD DUTY INCREASED BY Rs100/10 GRAMS

GENERAL

• PLANS INSTITUTIONAL REFORMS TO CONTROL FISCAL DEFICIT. BUT ITS NOT CLEAR.
• ASSUMES GDP GROWTH OF 8% IN FY11 AND 9% FY12.
• ALLOCATE Rs 347.2 CRORE FOR COMMON WEALTH GAMES.
• UNIQUE ID
• TO SET UP A PANEL TO REVIEW DOMESTIC FUEL PRICE.
• PURPOSE TO RAISE THRESHOLD FOR NON PROMOTER HOLDING IN ALL LISTED COMPANIES.
• FISCAL DEFICIT FORECAST 6.8% OF GDP
• BRANDED GEMS AND JEWELLERY EXEMPTED FROM DUTY
• DOES NOT MENTION ON VOTING RIGHTS CAP ON FII AND HIKE IN
• HOLDING LIMIT IN PSU BANKS.

Rajesh Nair

CEO RajRak Investment Advisors