Budget FY15: Rebuilding the
Economy
10th July, 2014
Infrastructure Focused Approach
The budget has delivered a clear break from subsidy and hand-outs driven approach of
the p...
Key Highlights
Fiscal deficit: The budget has provided a clear roadmap for fiscal consolidation
Subsidy: Total subsidies a...
The Government’s focus is clearly to cap less productive expenditure on various
subsidies and use the incremental governme...
Individual Tax Slabs
Individual Tax Payer
(Male & Female)
Senior Citizen Tax Payer
Slabs (Rs) Rate (%) Slabs (Rs) Rate (%)...
Sector Budget Impact Stance
Financials
Long term infra loans to be treated as CRR/SLR by banks which will free up capital ...
Sector Budget Impact Stance
Metals & Mining Increase in royalty charged by states Negative
Fertilizer No Change No impact
...
Market view
•Long term impact on national finances and corporate profitability through reform
measures introduced in vario...
Disclaimer
The information and views presented here are prepared by Karvy Stock Broking Limited or other Karvy Group compa...
Upcoming SlideShare
Loading in …5
×

Union budget 2014

551 views

Published on

The Budget 2014

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
551
On SlideShare
0
From Embeds
0
Number of Embeds
106
Actions
Shares
0
Downloads
5
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Union budget 2014

  1. 1. Budget FY15: Rebuilding the Economy 10th July, 2014
  2. 2. Infrastructure Focused Approach The budget has delivered a clear break from subsidy and hand-outs driven approach of the previous government to a more growth-focused developmental agenda. We see this budget as providing a clear vision for long term growth revival in India through large infrastructure spending, fiscal prudence, sustainable reduction in CAD and low inflation. Key highlights: • The treatment of long term infra loans as CRR/SLR by banks will give a big fillip to infrastructure sector. •Allocation at Road space put at 38000 core with target of constructing 8000 km of new roads in FY15 •Ten year tax holiday for power generation & Transmission companies •There is a clear boost to housing, roads, power projects through allocations and tax treatment. • A big boost is being given to develop travel and tourism as big revenue generator for the economy
  3. 3. Key Highlights Fiscal deficit: The budget has provided a clear roadmap for fiscal consolidation Subsidy: Total subsidies at 2.5 lac crores seem to be largely adequate as diesel price deregulation continues. However, slippages from last year might make food, fuel and fertilizer ending up slightly higher. The more realistic target of fiscal deficit is 4.5% for FY15 Borrowing: The government’s net borrowing programme has been pegged at Rs. 4.61lakh crore. This is lower than expectations and would result in downward pressure on bond yields. Growth: GDP growth for FY15 is estimated at 5.4-5.9%. All tax estimates have been made keeping the mid point of this range as benchmark Disinvestment: For FY15Rs. 40,400 crs is to be raised through disinvestment. Expenditure: The Total expenditure for FY14 is budgeted at Rs.17.9 lakh crs, with plan expenditure at 5.7 lakh crore. The Plan expenditures for FY13 and FY14 were cut drastically to control fiscal deficit. FY15 FY16 FY17 Fiscal Deficit 4.1% 3.6% 3%
  4. 4. The Government’s focus is clearly to cap less productive expenditure on various subsidies and use the incremental governmental revenues for boosting infrastructure and consumption growth. •The increase in 80c limit from 1lac to 1.5 lacs will boost savings. •Increasing tax free income to 2.5 lacs will boost consumption by ordinary citizens. •Clarity on tax treatment for offshore foreign investors as capital gains will help increase FII flows into Indian equity markets. •We would expect more Developments on Direct tax code and Goods and services tax during the course of this year. •Imposition of 10% customs duty on telecom and electronic equipments will encourage domestic production of these components Taxation
  5. 5. Individual Tax Slabs Individual Tax Payer (Male & Female) Senior Citizen Tax Payer Slabs (Rs) Rate (%) Slabs (Rs) Rate (%) Upto 2,50,000 0 Upto Rs 300,000 0 2,50,001-5,00,000 10 2,50,001-5,00,000 10 5,00,001-10,00,000 20 5,00,001-10,00,000 20 Above 10,00,000 30 Above 10,00,000 30 •The increase in 80c limit from 1lac to 1.5 lacs will boost savings. •Increasing tax free income to 2.5 lacs will boost consumption by ordinary citizens •Tax Deduction for interest paid on housing loan for a self occupied property has been raised to Rs 2 lakhs per annum
  6. 6. Sector Budget Impact Stance Financials Long term infra loans to be treated as CRR/SLR by banks which will free up capital for further lending. No money provided for capitalisation of Public Sector Banks. Composite foreign investment limit in insurance companies raised to 49% Positive for banks &Insurance and Companies. Slight negative for Psu banks Auto Cuts in excise duty introduced in Interim budget have been maintained Positive Power 10-year tax holiday for power generation and transmission companies. ultra modern solar power projects to be taken up in Rajasthan, Tamil Nadu, Ladakh with Rs 500 cr Positive FMCG It is proposed to increase the excise duty on cigarettes by 11-72%%. Increases is also proposed on cigars, cheroots and Cigarillos. 5% excise duty on aerated drinks containing sugar Negative for cigarette , beverage companies Oil & Gas Oil and Gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts, natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed, NELP blocks that were awarded but are stalled will be cleared. Positive for gas distribution companies & Oil PSUs Tourism E-visa facility to be provided to foreign tourists. Rs 100 cr for development of Archaeological sites. Gaya to be developed as world class tourism spot Propose Setting Aside Rs.500 Cr For 5 Tourist Circuits. Positive Ports & Waterways 16 new port projects to be awarded this year with allocation of over Rs 11,000 cr for Tuticorin, Kandla and other ports. Rs. 4200 cr set aside for Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia over 1620 km Positive Sectoral Impact
  7. 7. Sector Budget Impact Stance Metals & Mining Increase in royalty charged by states Negative Fertilizer No Change No impact Aviation New airports to be built in smaller cities Positive Roads Investment in NHAI and state highways to the tune of Rs 37,887 core including Rs 3000 crore for North- East Positive Cement No major development, however increase in new road projects to maintain the demand momentum Positive Agriculture Agriculture growth targeted at 4%. New fund for developing irrigation facilities in rural areas. Interest subvention scheme for providing short term crop loans to farmers with 3% interest subsidy. Agricultural credit increased 5,75,000 to Rs 800,000 crore. Positive Capital Markets Clarity on capital gains treatment for offshore fund managers will help increase FII flows into Indian equity markets. Positive for capital market players Real estate Mission for low cost housing proposed to incentivise development of low cost housing; Rs. 4000 cr announced. Pass Through Status For REITS To Avoid Double Taxation. Positive
  8. 8. Market view •Long term impact on national finances and corporate profitability through reform measures introduced in various sectors •We would expect banks, roads, ports, power & tourism companies to benefit from this budget. • Cigarette players are the worst hit due to increase in excise duty. •In the short term, we expect the market to focus on Q1 FY15 earnings starting this week. • For FY15, we would expect a Sensex EPS growth around of 15%. •We would expect earnings growth to accelerate once investment activity is revived and average at 25% for the next six years. •Maintain a positive bias on the markets. We arrive at a year end Sensex target of 29,300 based on 15 times FY16 earnings.
  9. 9. Disclaimer The information and views presented here are prepared by Karvy Stock Broking Limited or other Karvy Group companies. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended here may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned here, investors may please note that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arising from the use of this information and views mentioned here. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned companies from time to time. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd The information given in this document on tax are for guidance only, and should not be construed as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicability and incidence of tax on equity investments. Karvy Stock Broking Ltd. is a SEBI registered stock broker, depository participant, portfolio manager having its offices at : 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex, Mumbai 400 051. (Registered office Address: Karvy Stock Broking Limited, “KARVY HOUSE”, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034) SEBI registration No’s:”NSE(CM):INB230770138, NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O): INF010770131,NCDEX(00236, NSE(CDS):INE230770138, NSDL – SEBI Registration No: IN-DP-NSDL-247-2005, CSDL-SEBI Registration No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512” Swapnil Pawar Varun Goel

×