Union budget2010-11

2. BUDGET -
2010
Budget is not only for the aam aadmi of bharat
But also for mango people of india.
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Overview U N I O N B U D G E T, F Y 2 0 1 0 - 11
Highlights of UB
Impact of Budget Government's net borrowing Rs 3,45,010 crore (2010-11.)
mpact on Infra Str.
 Additional deduction - Rs 20,000 - long term infrastructure bonds for income
References
Disclaimer
tax payers.
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http://static.ibnlive.com/pix/sitepix/01_2009/interim-
Unique Identity Symbol – Indian Rupee in line with $, £, €, ¥.
budget-313.jpg
Defense allocation – Rs. 1,47,344 crore .
Fiscal deficit - 6.9 per cent in 2009-10 compared 7.8 per cent (previous fiscal.).

3. BUDGET -
2010 Overview
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Overview
 Tax increments – surprise personal tax front, disposable income
Highlights of UB
 Reduce Fiscal Deficit – 4.8% Of GDP by 2012, 4.1% of GDP by 2013
Impact of Budget
mpact on Infra Str. (6.9% of GDP in 2009-10)
References
Disclaimer
The End  Beneficial for FIIs
 Rs 5400 cr allocated for urban development
 FM has exercised moderation in rollback of stimulus
 Rs 48000 cr allocated for Bharat Nirman
 Rs 66100 cr allocated for rural development
 Allocation to NREGA raised to Rs 41000 cr
 To allocate Rs 22300 cr to Health Ministry

4. BUDGET -2010 Highlights of Union Budget 2010-11(1/4)
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Overview
Highlights of UB
Impact of Budget  Total Expenditure Proposed – Rs. 11,08,749 cr.
mpact on Infra Str.
References
Disclaimer  Gross Tax Revenue – approx. Rs. 7,46,651 cr.
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 Non Tax Revenues – approx. Rs. 1,48,118 cr.
 Fiscal deficit - estimated 5.5% of GDP at Rs.3,81,408 cr.
 46% - Total Outlay Planned – Rs. 1, 73, 000 cr. reserved Infrastructure dev.

5. BUDGET -
2010 Fiscal Deficit as % of GDP
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Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
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Sources: www.ibef.org
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6. BUDGET -
2010 Highlights of Union Budget 2010-11 (2/4)
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 Additional banking licenses - private sector players.
Overview
Highlights of UB  Public Sector Bank Capitalization – Rs. 16,500 cr. (Public Sector Banks) – attain
Impact of Budget minimum 8% TIER 1 capital by March 31, 2011.
mpact on Infra Str.
 Nutrient Based Subsidy policy - fertilizer sector effective April 1, 2010
References
Disclaimer
The End  Oil & Fertilizer subsidies – paid in cash not in bonds.
 Disinvestment process in government owned companies – progress, expected to
raise Rs.40,000 cr. during FY2010-11.
 3G Auction – expected Rs. 35, 000 cr.
 Central excise duty rate - non-petroleum products increased 8% to 10%
 Goods and Services Tax - introduce it by April, 2011.
 Deduction additional amount - Rs.20,000 for tax savings infrastructure bonds.
 MAT - increased from 15 % to 18 % - book profits.
 Service Tax – no change.
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7. BUDGET -
2010 Trends in disinvestment proceed
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Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
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Disclaimer
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8. BUDGET -
2010 Growth in total Govt Expenditure
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Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
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Sources : ICICI Budget Review
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9. 2
BUDGET -
2010 Highlights of Union Budget 2010-11 (3/4)
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Overview WIDENING OF TAX SLABS FOR INDIVIDUAL TAXPAYERS AS
Highlights of UB SHOWN BELOW.
Impact of Budget
mpact on Infra Str. FY 2009-10 FY 2010-11
References
Disclaimer
Income upto Rs 1.6 lakh Nil Income upto Rs 1.6 lakh Nil
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Income from Rs 1.6 lakh-Rs.3 10% Income from Rs 1.6 lakh-Rs.5 10%
lakh lakh
Income from Rs.3 lakh - Rs.5 20% Income from Rs.5 lakh - Rs. 8 20%
lakh lakh
Income above Rs. 5 lakh 30% Income above Rs. 8 lakh 30%

10. BUDGET -
2010 Sector Wise Impact of The Union Budget
Sectors (Click On Sector Name) Impact
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Overview Automobile Positive
Highlights of UB Consumer Durables Positive
Impact of Budget Retail Positive
mpact on Infra Str.
Banking Positive
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Disclaimer
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Infrastructures Neutral
Fertilizers Positive
Oil & Gas Positive
Ferrous Metals Neutral
Non-Ferrous Metals Neutral
Textiles Neutral
IT & ITES Negative
Real Estates Negative
Telecom Negative
Health Care & Pharmaceuticals Marginally Positive

11. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Automobile Positive
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer  The auto sector has seen significant rise in sales and the 22% rise in
The End sales for April-December 2009 period over the previous year.
 The partial roll back of stimulus measures is anticipated very
much and so, the rise in excise duty from 8 to 10% across board
and from 20% to 22% for SUVs and MUVs has already been priced
in the stock prices.
 The hike in excise duty on petrol and diesel may weigh negative on
the auto industry as such. But the rise in disposable income for the
consumer is expected to more than compensate for the above
negative factors as the demand for passenger vehicles and two
wheelers rises.
 Neutral for stocks like Ashok Leyland, Mahindra & Mahindra.
 Positive for stocks like Hero Honda, Bajaj, Maruti.

12. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Consumer Durables Positive
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer  As stated above the budgetary measures are the most positive
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for consumer durables as the discretionary income raises in the
hands of the consumer and so does he spend more on
household appliances and other consumer durables.
 The central excise duty on LED lights to be reduced from 8 per cent
to 4 per cent at par with Compact Fluorescent Lamps.
 Effect: Positive for stocks like LG electronics, Whirlpool, SAMSUNG,
MIRC Electronics, MIC Electronics .

13. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Retail Positive
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer  The latter half of FY2009-10 saw recovery in consumer
The End spending at organized retail as the footfalls and same store
sales for the major companies started to rise.
 The latest budgetary measures which put more disposable income
in the hands of upper middle class/rich consumer by widening the
tax slabs and thus letting them spend more on consumer
durables mostly through organized retail would prove to be a shot
in the arm for the recovering industry.
 The implementation of GST would also help the industry as it cuts
down their operating costs due to easier movement of retail
products across state borders.
 Positive for stocks like Pantaloon, Koutons Retail, Shoppers stop.

14. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Banking Positive
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.  Government’s proposal of infusing Rs.16,500 cr into Public Sector
References
Disclaimer Banks to help banks maintain 8% tier 1 capital by March 2011 turns
The End out to be a real positive for PSBs.
 The extension of bank loan repayment periods for farmers by 6
more months to Sep 2010 would help delay the recognition of
such loans as NPAs but may not make much of a difference to
books of the banks. The interest subvention on farm loans will
improve the quality of such assets.
 The government has increased its emphasis on infrastructure
financing as the disbursements from IIFCL are expected to rise to
Rs.20,000 cr by end of FY2010-11.
 Eeffect: Positive for PSBs especially DENA, Bank of Maharashtra.
 The proposal of giving additional banking licenses to NBFC would
help such NBFCs raise low cost capital and help grow their business.
 Positive for NBFCs like Reliance Capital, IFCI, IDFC.

15. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Infrastructure Overall Effect: Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.  46% of the total plan allocation to about Rs.173552 crs is
References
Disclaimer provided for infrastructure development in FY2010-11.
The End  IIFCL’s disbursements are expected to reach Rs.20,000 cr by
March 2011 from Rs.9000 cr in March 2010 and refinancing of
infrastructure projects to increase to Rs. 6000 cr.
 The additional tax savings of Rs.20,000 by investing in long-
term infrastructure bonds would mobilize more funds for the
sector.
 The government has continued its thrust on rural infrastructure
projects as Rs.48000 cr has been allocated under Bharat Nirman
Programme.
 The MAT being increased from 15% to 18% for FY2010-11
may weigh negative on many players carrying out BOT projects.

16. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Infrastructure Overall Effect: Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
Roads :
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 13% has been increased in allocation to road transport from
Rs.17520 cr to Rs.19,894 cr.
 The payment of import duty on depreciated value rather than
the original value of resale machinery and the complete
exemption of import duty to special machinery will reduce the
overall capex for the players.
 Marginally Positive for players like L&T, HCC, Reliance
Infrastructure, IVRCL Infra, Gammon India, Nagarjuna
Constructions.

17. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Infrastructure Overall Effect: Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
The Power :
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 Plan allocation for power sector excluding RGGVY (Rajiv Gandhi
Grameen Vidyutikaran Yojna) increased 130% from Rs.2230 crore
in 2009-10 to Rs.5,130 crore in 2010-11.
 The government strengthened its stand for cleaner energy as it
increased its outlay for New and Renewable energy by 61% to
Rs.1000cr in 2010-11. And a clean energy cess is levied on
domestically produced coal of Rs.50/tonne as well as on imported
coal.
 Effect is Positive for players using renewable energy like Suzlon.
Marginally negative for other power utilities.

18. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Infrastructure Overall Effect: Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
Housing :
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 The allocation for Rajiv Awas Yojana has been increased from
Rs.150 cr last year to Rs.1270 cr in FY2010-11. Significant rise in
allocation of Rs.1270 cr for Rajiv Awas Yojna as compared to RS.150
cr last year.
 The extension of the scheme where 1% interest subvention is given
on housing loan upto Rs.10 lakh would help the low-cost housing
industry.
 This would help players taking up slum rehabilitation works and
low cost housing. Positive for companies such as HDIL, Omaxe etc.

19. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Fertilizers Positive
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer  The government has declared the subsidy in the form of cash
The End contrary to the subsidy payment as done previously. This would
help the companies to manage their working capital better.
 The government has reiterated the implementation of nutrient
based subsidy scheme starting April 1,2010 and also ensured that
the complex fertilizer prices would remain constant post the NBS at
the present levels.
 Importantly, the measures announced in favor of agriculture sector
like interest subvention for farmers would help improve
agricultural activity which in-turn would improve the demand for
fertilizers.
 Positive for stocks like Nagarjuna Fertilizers, Chambal Fertilizers,
GSFC.

20. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Oil & Gas Neutral/Positive for
Overview
OMCs
Highlights of UB
Impact of Budget
mpact on Infra Str.
 The government’s move to restore the basic duty of 5 per cent on
References
Disclaimer crude petroleum would hurt the refining margins of the domestic
The End refiners and is especially negative to private refiners.
 Restoration of 7.5 per cent duty on diesel and petrol and 10 per cent
on other refined products would provide duty protection for the oil
marketing companies.
 The Central Excise duty on petrol and diesel is enhanced by Re.1 per
litre each but the effect on OMCs is neutral as such hike is passed on
to the customer through higher retail prices.
 The government has announced that the subsidy would be
distributed in cash to the oil marketing companies and this will
improve the cash flows for the oil marketing PSUs.
 The increase in MAT rate may weigh negative on RIL. Overall effect
is positive for oil marketing companies like HPCL, BPCL, Indian Oil
.Neutral for oil exploration companies like ONGC, Oil India, Cairn
and negative for private refiners like RIL..

21. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Ferrous Metals Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
 The increase in excise duty on all ferrous products from 8% to 10%
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as a part of the partial roll back in stimulus is expected to be passed
on to the end consumer by hiking the prices. Even the increase in
manufacturing cost due to levy of cess of Rs.50/tonne on coal is also
expected to be reflected in the price rise.
 The smaller players may have to take a slight hit on the margin
front considering the rise in raw material cost. But, the increased
outlay for infrastructure investment and improved emphasis on
housing is expected to drive the demand for steel going forward and
this can compensate for the rise in costs to a greater extent.
 Overall effect is neutral for the steel players like Tata Steel, Jindal
Steel.

22. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Non-Ferrous Metals Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
 Here it’s the same case as it is with the ferrous metals. The rise in
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excise duty from 8% to 10% is expected to be passed on to the end-
customer and even the same applies to the levy of cess on coal.
 And the 46% planned outlay on infrastructure investment
would create demand that could absorb the rise in prices.
 So, overall effect is neutral for the non-ferrous manufacturers
like Nalco, Hindalco, Sterlite, Hindusthan Zinc.

23. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Textile Neutral
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
 The 2% interest subvention on pre-shipment credit is extended for
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1 more year upto March 31, 2011 which would help small scale
exporters save on interest costs.
 The excise duty on man made fibre and yarn is increased to 10%
from 8% but the resultant rise in price is expected to be absorbed
by better demand.
 The overall effect on the sector is neutral.

24. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt IT & ITES Negative
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
 The government in its Union Budget FY2010-11 has announced the
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hike in MAT rate from 15% to 18%. As most of the IT companies pay
taxes at the MAT rate on their book profits, the 300 basis points
hike is expected to affect their net margins negatively.
 The significant rise in government spending on IT & IT related
projects is expected to generate decent business opportunities for
the firms focused on domestic market.
 But the overall effect is negative as the 3% rise in MAT may
more than compensate for any positive for the industry from the
budget. Negative for companies like Infosys, Tcs, Wipro.

25. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Real Estate Negative
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
 Extending of interest subvention of 1% for loans upto Rs.10 lakh for
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low cost housing for one more year would help sustain more
demand in this category.
 The budget announces that the service tax would be levied on
renting of property with retrospective effect from June 1, 2007.
 New tax schemes are going to dent the profits of the real estate
players if they can’t be passed on to the customer completely. Even
any price rise would hurt the demand for the already ailing sector.
 Overall effect is negative for real estate stocks like DLF, Anant
Raj, Unitech, Shobha Developers.

26. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Telecom Negative
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer
 The 3% rise in MAT rate in the union budget is expected to decline
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the net profit margins of the telecom majors.
 Negative for companies such as Bharti, Airtel, RCOM.
 Earning of telecom companies like bharti , Idea and Rcom by 2-3%.
 Mobile phones :
 The exemption of basic, CVD and special additional duties on
domestically manufactured mobile phone accessories is to be
extended till March 31, 2011 and the existing exemption is now
being extended to parts of battery chargers and hands-free
headphones. These measures would encourage the domestic
manufacture of such items.

27. BUDGET -
2010 Sector Wise Impact of The Union Budget
Restart the PPt Health Cares & Marginally Positive
Overview
Pharmaceuticals
Highlights of UB
Impact of Budget
mpact on Infra Str.
References
Disclaimer  Customs duty reduced from 7.5% to 5% on all medical devices
The End and they even attract no countervailing duty. Also, the import
duty exempted on specified inputs used for the manufacture of
orthopedic implants.
 Weighted deduction on expenditure incurred on in-house R&D,
enhanced from 150 per cent to 200 percent. Weighted deduction
on payments made to National Laboratories, research
associations, colleges, universities and other institutions, for
scientific research enhanced from 125 per cent to 175 per cent.
 Positive for companies like Dr. Reddy’s Labs, Ranbaxy Labs, Cipla
etc.
 But here again the increase in MAT would have slight negative effect
for many pharmaceutical players and in-turn would offset the
positive takeaways for the sector from the budget.

28. BUDGET -
2010 References
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Overview www.planningcommission.org
Highlights of UB
Impact of Budget
mpact on Infra Str. www.ibef.org
References
Disclaimer
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www.icicidirect.com
Business & economy
Times of India / Economic
Times
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29. Restart the PPt
Overview
Highlights of UB
Impact of Budget
mpact on Infra Str.
Disclaimer
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