Dear Customer,
Honourable Finance Minister has presented the Union Budget 2010-11 in the parliament. We bring you a quick sum-up of the budget "Budget 2010-11 at a Glance" to give you an insight into the measures undertaken by the FM both at micro as well as macro level and its immediate repercussion on the stock market.
INCOME TAX Individual Positive
Existing Proposed From Rs.1,60,001 to Rs 3,00,000 -10% From Rs.1,60,001 to Rs 5,00,000 -10% From Rs.3,00,001 to Rs 5,00,000 -20% From Rs.5,00,001 to Rs 8,00,000 -20% Above Rs.5,00,000 -30% Above Rs.8,00,000 -30%
- Additional investment of Rs 20,000 in infra bonds over and above Rs 1 lakh in 80C.
- Enhance tax audit limits for professionals to Rs 15 lakh
Corporate Positive
- Reduces current surcharge of 10% on domestic comp to 7.5%
- Peak excise duty hiked from 8% to 10%
- Weighted deduction from 150% to 200% for in-house R&D
- Limits for turnover for purpose of presumptive taxation of small business enhanced to Rs 60 Lakhs
TAX - OTHERS Goods and Service Tax (GST) and Direct Tax Code (DTC) Positive
- Implementation of GST and DTC by April 2011
MAT Negative
- Minimum Alternate Tax up from 15% to 18% on book profits
AGRICULTURE Positive
- Will reduce fertilizer subsidy
- Focus to improve food security
- To provide Rs 400 cr to extend green revolution to eastern India
- Sets aside Rs 200 cr for a new agricultural initiative
- Repayment tenure for farmer loans extended by 6 months to June 30th 2011
- To provide 2% loan subsidy to farmers
- Proposes to increase subvention to 5% in repayment of farmer loans
- Allocates Rs 1,200 cr for drought mitigation
- Agri credit flow target for this year increased to Rs 3,75,000 cr from Rs 3,25,000 cr last year
- To set up 5 more mega food park projects
- Rs 300 cr for Rashtriya Krishi Yojna
- Rs 100 cr allocated for women farmers
- External commercial borrowing will be available for food storage industries
EDUCATION Positive
- Govt allocates Rs 31,036 cr for school education and Rs 3,675 cr for elementary education
INDUSTRIES Automobile and Ancillaries Positive
- Excise duty on large cars, SUVs, multi utility vehicles raised to 22% from 20%
- Full excise cut on electric cars
Banking & Financial Companies Positive
- Sets aside Rs 16,500 cr for PSU banks to get minimum 8% tier 1 capital by March 2011
- RBI to release additional licenses to pvt sector banks and non-banking financial institutions
- Repayment tenure for farmer loans extended by 6 months to June 30th 2011
- Agri credit flow target for this year increased to Rs 3,75,000 cr from Rs 3,25,000 cr last year
- To provide 2% loan subsidy to farmers
- Proposes to increase subvention to 5% in repayment of farmer loans
- IIFCL disbursements at Rs 9,000 cr by March 2010
- Housing loan: 1% interest subvention scheme extended, allocation Rs 700 cr
- Allocates Rs 100 cr for new pension scheme, to benefit 100,000 low income citizens
- All villages with 2000+ population to get banking facilities by 2012
Cement Positive
- Partial rollback of excise duty on cement
Infrastructure & Engineering Positive
- 44% of total plan outlay allocated to infrastructure
- Budget allocates Rs 1.73 lakh cr for infrastructure
- IIFCL disbursements at Rs 9,000 cr by March 2010
- Delhi-Mumbai industrial corridor taken up for development
- Road transportation kitty increased 13% to Rs 19,894 cr
- Govt allocates Rs 16,500 cr for railways
- Rs 66,1000 cr allocated for rural development in FY11
- 35% of development funds to be invested in rural India
- Urban development allocation up more than 75% to Rs 5,400 cr
- Rs 100 cr for financial inclusion fund; Allocation for Bharat Nirman at Rs 48,000 cr
- Additional Rs 20,000 deduction available for investment in infra bonds
- Government committed to SEZs to promote exports
- No import duty on some equipment in road projects
Fertilizer Positive
- To provide govt subsidy in cash instead of bonds for fertilizer
- Will reduce fertilizer subsidy
- Rs 300 cr for Rashtriya Krishi Yojna
FMCG Positive
- To set up 5 more mega food park projects
- External commercial borrowing will be available for food storage industries
- 35% of development funds to be invested in rural India
- Rs 66,100 cr allocated for rural development in FY11
- Duties on smoking and non-smoking tobacco products up
Gems & Jewellery Negative
- Import duty on silver raised to Rs 1,500 per kg
Healthcare Positive
- Focus to improve healthcare systems
- Govt allocates Rs 22,300 cr to healthcare
- Weighted deduction from 150% to 200% for in-house R&D
IT/ITES Neutral
- UID authority given Rs 1,900 cr
- Government committed to SEZs to promote exports
Oil & Gas Positive
- To discuss Kirit Parikh report in due course
- Petroleum products: basic duty of 5% crude , 7.5% on diesel & petrol; 10% on refined products
- Rs 1 per litre excise on petrol, diesel
- To provide govt subsidy in cash instead of bonds for oil
Power Positive
- Govt to facilitate 20,000 MW of solar power by 2022
- Govt to have a coal regulator for allocation of coal blocks
- To levy clean energy cess on imported coal
- Funds for power allocation raised from Rs 2,232 cr to Rs 5,132 cr
- Propose to hike allotment for renewable energy by 61%
- For solar mission, solar power generating units rates are to be reduced by 5%
- Cut in duty for photovoltaic units
PSU Positive
- Divestment proceeds budgeted higher in FY11 vs FY10
- Govt to raise Rs 25,000 cr through disinvestment
Real Estate Positive
- Indira Awas Yojana: allocation up by Rs 10,000 cr
- Sops for real estate, housing projects extended by a year
- Housing loan: 1% interest subvention scheme extended to March 2011, allocation Rs 700 cr
- Delhi-Mumbai industrial corridor taken up for development
Telecommunication Neutral
- Allocation for Bharat Nirman at Rs 48,000 cr
- Mobile accessories market to get tax breaks
Textile Positive
- FM extends interest subvention of 2% for exports of handlooms, handicrafts and SMEs for 1 year
- Exclusive skill development programme in textile and garment sector
- Khadi institutes get Rs 400 cr
- GOI sign USD 150 mn deal with ADB for implementing Khadi programme
- One time grant of Rs 200 cr to Tamil Nadu for textiles
- Government committed to SEZs to promote exports
Tourism Positive
- To boost tourism investment, offers investment linked tax deductions
- Rs 200 cr for Goa to restore beaches
MARKET REACTION Indices Open At 1:00 PM Change Sensex 16,255.33 16,651.66 2.44% Nifty 4,858.50 4,969.90 2.29% BSE Midcap Index 6,307.66 6,447.66 2.22% BSE Small Cap Index 7,987.75 8,118.65 1.64% BSE AUTO 6,848.06 7,164.82 4.63% BSE REALTY 3,204.99 3,330.80 3.93% BSE METAL 16,005.72 16,573.39 3.55% BSE BANKEX 9,620.78 9,952.23 3.45% BSE OIL&GAS 9,522.13 9,711.39 1.99% BSE PSU 9,139.43 9,305.40 1.82% BSE CG 13,358.47 13,606.59 1.86% BSE POWER 2,959.28 3,002.65 1.47% BSE CD 3,962.49 4,026.30 1.61% BSE HC 4,830.05 4,909.69 1.65% BSE TECk 3,180.89 3,211.36 0.96% BSE FMCG 2,726.01 2,751.64 0.94% BSE IT 5,189.03 5,229.08 0.77% Markets surged with Budget announcement at 1:00 PM (IST) Today, the markets opened on a firm note taking cues from positive Asian peers ahead of the announcement of Union Budget 2010-11. However, during mid-session, markets edged higher taking cues from the Union Budget. Lower fiscal deficit forecast for 2010-2011, changes in personal tax rates which will lift disposable incomes in the hand of individuals and a reduction in surcharge on corporate tax for domestic companies to 7.5% from 10% lifted sentiments. The FM is aiming at implementing Direct tax code and GST by April 1, 2011 while explicit reduction in domestic public debt equity ratio and gradually phasing out the stimulus measures are also on the cards The overall market breadth on BSE was positive with 1,664 stocks advancing while 851 stocks declined unchanged on BSE.
Infrastructure stocks like AIA Engineering, Reliance Infra, Punj Lloyd and Gammon India were up after the government increased allocation to the sector.
Power stocks like NTPC, Reliance Infrastructure, Reliance Power and CESC rose after finance minister said allocation for the power sector will be doubled to Rs 5,100 crore.
Realty stocks like Omaxe, Sobha Developers, Unitech and DLF rose after finance minister extended 1% interest subvention scheme for housing loans.
Fertilizer companies like Chambal fertilizer, Nagarjuna Fertilizer and Coromandel International gained after the FM proposed to provide government subsidy in cash instead of bonds for fertilizer.
Banking stocks like SBI, Yes Bank, ICICI Bank, HDFC Bank gained as RBI is set to release additional licenses to private sector banks and non-banking financial institutions. The government has also set aside Rs. 16,500 crore for PSU banks to get minimum 8% Tier I capital by March 2011.
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