Union_Budget_ebook_download_2013 dpkmjn.pdf

7/29/2019 Union_Budget_ebook_download_2013 dpkmjn.pdf

1/24


2/24
http://www.moneycontrol.com/video/budget-news/live-budget-2013-analysis-fm-has-donecommendable-job-given-challenges-says-pm_831752.html


3/24

How the Sensex moved to major announcements on Budget Day

Sensex at open: 19264.80, up 112.39 points Sensex at 11 am: FM begins Budgetspeech. 19286.72, up 134.31 points.

Sensex at 11.46am: Extra investment allowanceof 15% for corporates investing over Rs 100crore in plant and machinery.

Sensex at 12pm: Entry norms for FIIs to beeased further.

Sensex at 12.11pm: Additional tax deduction ofRs 1 lakh for first time buyers of houses valuedup to Rs 25 lakh

Sensex at 12.16pm: Fiscal deficit for FY13at 5.2 percent and FY14 fiscal deficit seen at4.8 percent.

Sensex at 12.21pm: Super Rich Tax - Surchargeof 10 percent on those with a taxable income of

over Rs 1 crore

Sensex at 12.30pm: TDS of 1 percent onsale of immovable property valued over Rs

50 lakh.Sensex at 12.43pm: Government to borrow Rs6.3 lakh crore from the market.

Sensex at 01.18pm: Disappointment fromthe Budget led to sell-off.

Sensex at 02.59pm: Fresh bout of selling driftsSensex to fresh 3-month low

Sensex at 3.30pm: Highest ever turnover ofRs 4.39 lakh crore, 18861.54, down 290 pts

Market Commentary:Sensex nosedives 290 pts as Budget 2013 flops

Top Gainers I Top Losers I Most Active I Commodities I Global Indices
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4/24

Compared to expectations, FM has delivered a mouse

Key Takeaways

Surcharge of 10 percent on those with a taxableincome of over Rs 1 crore. Surcharge oncorporates with income over Rs 10 crore raised to10 percent from 5 percent.

Government to borrow Rs 6.3 lakh crore from themarket, while most players were expecting thisfigure to be around Rs 5.2 lakh crore.

Fiscal deficit for FY13 at 5.2 percent and FY14

fiscal deficit seen at 4.8 percent.

Rajiv Gandhi Equity Savings Scheme to beliberalised.

Additional deduction of interest up to Rs 1 lakh fora person taking first home loan up to Rs 25 lakhduring period 1.4.2013 to 31.3.2014

A tax credit of Rs 2000 to every person with totalincome in the first bracket of Rs 2 lakhs to Rs 5lakhs.

Foreign portfolio investment in excess of 10percent in an Indian company will be classified asforeign direct investment. Entry norms for FIIs tobe eased further.

Duty on imported luxury goods such as high endmotor vehicles, motor cycles, yachts and similarvessels increased.

For full article, Click here
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5/24

Sector: Auto Sector: FMCG Sector: Oil & GasExpectations

Levy of additional duty of Rs80,000

Extension of Countervailingduty at 6%, customs duty 0%

Maintain customs duty of 75%on luxury vehicles.

Expectations

Increase in excise duty oncigarettes.

Expect the general excise dutyrate to be maintained at 12%.

Clarity on implementation andtimelines of GST will bepositive.

Expectations

NELP blocks will be cleared.

Shale gas exploration policy tobe formulated.

New oil and gas explorationpolicy will be formulated onrevenue sharing.

Proposals

Excise duty on SUVs up from27% to 30%.

Customs duty on luxuryvehicles hiked to 100%.

Higher allocation to JNNURMleading to additional demand of10,000 buses augurs well forall commercial vehiclemanufacturers.

Proposals

Specific Excise Duty oncigarettes increased by 18%.

Tax on royalty increased from10% to 25%.

Proposals

Import duty on crude oil mightbe re-imposed.

Cess on crude oil productionmight be increased fromcurrent levels of Rs 4,500/MT.

Removal of 5% customs dutyon LNG and natural gas.

Impact

Negative for M&M and TataMotors. Higher allocation toJNNURM positive for allcommercial vehiclemanufacturers.

Impact

Cigarette companies will passon the increase to thecustomers. This couldmarginally impact volumegrowth.

Impact

Positive for the upstreamcompanies like Reliance,ONGC.


6/24

Sector: Banks/Financials Sector: Infra Sector: PharmaExpectations

Expects capital infusion ofaround Rs 20,000 crore.

Easing of investment norms,deepening of bond markets.

Reduction in STT

Expectations

Higher allocation toinfrastructure spending.

Elimination of hurdles for roadsand highways.

Higher allocation toinfrastructure tax free bonds.

Expectations

Exempt all life-savingmedicines from proposed GST.

Increase the list of life-savingdrugs to 5% concessional duty

New oil and gas explorationpolicy will be formulated onrevenue sharing.

Proposals

Extension of 4% farm loans toprivate banks.

Additional deduction of Rs1lakh interest on housing loansof up to Rs25 lakh.

Reduction in STT. Introductionof commodity transaction taxon non-agri contracts

Proposals

Constitution of a regulatoryauthority for road sector.

3000 km of road projects to beawarded in first 6 months ofFY14.IDFs will be encouraged toprovide long-term low-costdebt

Proposals

Royalty/technical fees paid toNRIs increased to 25%.

To allot Rs 37333 crore forhealthcare, family welfare inFY14.

Impact

Negative for private sectorbanks. Positive for PSU banks.Introduction of CTT negativefor broking companies.

Impact

Positive for the sector. It willboost infrastructuredevelopment in roads, ports,housing and railways.

Impact

Higher allocation is positive forthe sector. Increase in royaltyfees marginally negative forRanbaxy


7/24

UDAY KOTAKKotak Mahindra Bank

SAMIR ARORAHelios Capital

MADHU KELAReliance Capital

The Finance Minister has lived upto his promise on fiscal deficit.The Budget 2013-14 is good forcapital markets and investments.

The Budget 2013-14 turned out tobe unexciting for equity markets.No direction changing movesannounced to revive markets.

TheBudget is encouraging as FMhas not thrown any negativesurprises. Fiscal deficit projectionof 4.8% looks credible.

NILESH SHAHAxis Direct VALLABH BHANSHALIEnam Securities VIBHAV KAPOORIL&FS

The RBI's next step potentiallycould be towards rate cutbecause now they have beengiven a space on the fiscal deficitside.

FM has done more good thanbad. He did not speak on how thecurrent account deficit will behandled.

With the limited options FM hasdone a decent job. The marketwill resume downtrend from nowonwards.


8/24

DEEPAK PAREKHHDFC

CHANDA KOCHHARICICI Bank

R SHANKAR RAMANL&T

It is a very realistic, balanced, andpragmatic Budget. We have hadone of the worst years in adecade and one cannot expectmiracles from him.

Private sector banks have beengiven a level-playing field vis-a-visthe public sector banks.

The challenge always has been toconvert some of these targets like3000 kms of new roads intoimplemental plans.

PAWAN GOENKA

M&M

KOUSHIK CHATTERJEE

Tata Steel

ADI GODREJ

Godrej IndustriesDon't agree with excise duty hikeon SUVs. Diesel tax not beingimplemented is very good newsfor the sector. I would rate budgetas 7.5/10.

The focus would be on how moreefficiently coal can be mined. Ouraim is to increase mining withavailable reserves.

FY14 Budget is a growth orientedone and the emphasis remains oninclusiveness. Expenditure andexecution is important.


9/24

ITC Coal India ONGC

Proposal:SED on cigaretteshiked by 18%. Negative for ITC.

Proposal:To encourage PPPprojects for coal. Positive forCoal India.

Proposal:To announce policyon Shale gas based on revenuesharing, Blocked NELP blockswill be cleared. Positive forReliance Inds, ONGC.

ICICI Bank Tata Motors DLF

Proposal:4% farm loan schemeextended to private sector banks.Negative for private sectorbanks.

Proposal:Excise duty on SUVupped to 30% from 27. Negativefor M&M, Tata Motors.

Proposal:House loans up to Rs25 lakh will be allowed anadditional deduction of interest ofRs 1 lakh. Positive for realty.

SBI Sun Pharma Jain

Irrigation

Proposal:To provide Rs 14,000crore for public sector banksrecapitalisation. All WomensBank to be set up via publicsector. Positive for public sectorbanks.

Proposal:To allot Rs 37333crore for healthcare, familywelfare in FY14: Positive forpharma stocks.

Proposal:Rs 27,049 croreallocated to Ministry ofAgriculture, up 22%. Positive forJain Irrigation, Monsanto,fertilisers and pesticides.
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10/24

EducompSolutions

NTPC CenturyTextiles

Proposal:Rs 65,877 Cr hasbeen allocated to education, up17% from FY13. Positive foreducation stocks.

Proposal:Extension of sunsetclause for profit-linked incentiveby one year: Positive for thepower sector.

Proposal:Propose technologyupgrade scheme for textile sectorto Rs 2400 crore in FY14.Positive for Century Textiles,Alok, Arvind.

Suzlon

Energy

SKS Micro Sadbhav

Engineering

Proposal:Higher allocation forwind energy. Positive for Suzlon.

Proposal:Bank correspondentscan sell micro finance products.Positive for SKS Micro.

Proposal:3000 km of roadprojects will be awarded in first 6months of FY14. Positive forSadbhav Engineering,construction companies.

Triveni

Engineering

Moschip Speciality

Restaurants

Proposal:Allocation of Rs15,260 crore towards clean

drinking water & sanitation.Positive for Triveni Engineering,Va Tech Wabag.

Proposal:No custom duty forplant, machinery for semi-

conductors. Positive for Moschip,SPEL.

Proposal:Finance Minister toimpose service tax on all AC

restaurants. Negative forSpeciality Restaurants.
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11/24

Super Rich Tax: 10% Surcharge on income above Rs 1 crore.

Tax credit of Rs 2000 for income between Rs 2-5 lakh.

MALE:No change in tax slabs.TAX RATE NOW POST BUDGET

Nil 2 lakh 2 lakh

10% 2-5 Lakh 2-5 Lakh

20% 5-10 lakh 5-10 lakh

30% Above 10 lakh Above 10 lakh

FEMALE:No change in tax slabs.TAX RATE NOW POST BUDGETNil 2 lakh 2 lakh

10% 2-5 lakh 2-5 lakh

20% 5-10 lakh 5-10 lakh


SENIOR CITIZEN:No change in tax slabs.TAX RATE NOW POST BUDGET

Nil 2.5 lakh 2.5 lakh

10% 2.5-5 lakh 2.5-5 lakh

20% 5-10 lakh 5-10 lakh


VERY SENIOR CITIZEN:No change in tax slabs.TAX RATE NOW POST BUDGET

Nil 5 lakh 5 lakh

20% 5-10 lakh 5-10 lakh


Click here to use our tax calculator to find out your new

tax structure.
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12/24

Cigarettes SUVs

Set Top Boxes Mobile phones (GSM)

Yachts Marble

MP3 Players Passenger cars

Silk MUVS

Diamonds Imported Jewellery

Leather Goods Electrical plants

Readymade Garments Handmade carpets


13/24

GDP Trend & Forecast

Key Takeaways

The government expects GDP to grow in 6.1-6.7 percent range next year.

Wholesale price inflation is seen between 6.2-6.6 percent by March this year.

Revival of investment in infrastructure is one of the key challenges before the

government.

The Survey based on developments of FY13, draws out a rather cautious picture of the

year gone by, emphasizing the continued need for reforms in the coming months with anoutlook for the next fiscal pointing towards gradual improvements.

9.6%9.3%

6.7%

8.6%

9.3%

6.2%

5.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

GDP Growth Rate%


14/24

Fiscal Deficit

Key Takeaways

The Government will be able to achieve its fiscal deficit target of 5.3 percent for the

current year.

Revenue collection target for FY13 is likely to be significantly below target.

The Survey sees oil subsidies as a key fiscal risk, and that the government needs to

raise diesel and LPG prices in line with global rates.

There is limited room to grow exports, given adverse local and global factors

The only way current account deficit can be kept in check is by reducing imports of gold

and oil.

3.3%

2.5%

6.0%

6.5%

4.8%

5.7%5.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Fiscal Deficit as % of GDP


15/24

Current Account Deficit Foreign Exchange Reserves

Average Exchange Rate Savings Rate as % of GDP

Inflation Rate FDI & FII Flows

-2.8 -2.8

-4.2-4.6-5

-4

-3

-2

-1

0

% to GDP

279.1

304.8

294.4 295.5

260

270

280

290

300

310

Reserves (in USD Bn)

47.4445.56

47.92

54.47

3942

45

48

51

54

57

USDINR

32.0

33.7 34.0

30.8

2930

31

32

33

34

35

Savings Rate %

3.8

9.68.9

7.6

0

3

6

9

12

Inflation%

17.9

11.8

22.1

12.8

32.430.3

17.2

5.8

0

5

10

15

20

25

3035

FDI FII (USD Bn)


16/24

No hike in passenger fares; freight revenues eyed

Key Takeaways

No hike in passenger fares. Railways propose no hike in Reservation fee,tatkal charge.

Freight charges on diesel, LPG, steel, iron ore,cement, urea up by 5.8%.

Railways to launch 67 new express trains, 26new passenger trains.

Railways to introduce AC coaches for Mumbai

suburban network in FY14.

New system to enable booking of 7,200 tickets

per minute versus 2,000 now.

FY13 railway losses seen at Rs 24,600 croreversus Rs 22,500 crore year ago.

Railways to raise Rs 95,000 crore for the next 4years.

Rail Budget Full Speech I Analysis I Rail Budget Highlights Full article
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17/24

Coal India Bhel ACC

Proposal:Rs 4,000 crore hasbeen allotted for coal mineconnectivity projects.

Proposal: Railways to set upelectromotive unit in Rajasthanin joint venture with BHEL.

Proposal:Freight rates to goup by 5.8%, Negative forcement, steel, iron ore andurea companies.

TitagarhWagons

Texmaco Rail GammonInfra

Proposal: To introduce ACcoaches for Mumbai suburbancoaches. Positive for TitagrahWagons, Texmaco Rail.

Proposal: Railways to set upcoach manufacturing facility atHaryana; Positive forTexmaco, Titagarh, BEML.

Proposal:Rs 9,000 crore hasbeen allocated for port andmine connectivity. Positive forGammon Infra, L&T, NCC.

Suzlon KECInternational

Siemens

Proposal:Railways to set up75 MW windmill plants.

Proposal:Railways to set upequipment signaling plant atChandigarh via PPP.

Proposal:Railways tocomplete electrification of1,200 km.

VerdictRailway Budget turned out to be a non-event. Railway Minister P K Bansal failed to deliver some big

ticket announcements. Major railway stocks like Kalindee Rail, Kernex, Titagarh Wagons, Texmaco Rail

saw a huge sell-off in trade.
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18/24

Investors to face some small changes following Budget

- Arnav Pandya, Financial Planner

Investors will witness some incremental changes as far as theirinvestment plans are concerned in the coming financial year followingthe announcement of the Union Budget 2013-14. These will notmean a major deviation from their existing plans though they will beable to make use of some additional options in their investment mix.

One bit of good news is that the investors will have a choice of tax

free infrastructure bonds for one more year as there has been a permission given for the issuance of

these bonds. The individual can choose this as a long term option for parking their funds for 10 to 15

years and this will not have an adverse tax impact because of the fact that the income will be tax free intheir hands.

The Rajiv Gandhi Equity Savings Scheme (RGESS) has also witnessed some small changes wherein the

income limit for being eligible for the scheme has been raised to Rs 12 lakh. At the same time the benefit

can be claimed over a period of three years as compared to the one year time period that exists currently

which means that the investor can actually phase out their investments to suit their requirements. The

choice of instruments in the scheme has also been increased as equity oriented funds have been

included in the eligible list of investments which will help the investor to choose a fund as per their liking.

On the house property front there is an attempt to encourage first time investors through a higher

deduction that will be available for repayment of interest on housing loans. For a first time buyer if the

value of the property is Rs 40 lakh or less and if the housing loan is Rs 25 lakh or lower then an additional

deduction of Rs 1 lakh would be available over and above the existing Rs 1.5 lakh deduction. Once again

this can be easily claimed because of the fact that is can be taken over a two year time period.

However the provision for a tax deducted at source at the time of sale of the house property if the value of

this is Rs 50 lakh or higher would be a negative. This would increase the burden on the individual in terms

of compliance and effort in deducting and depositing the tax with the government.

There will also be a better option available for those who want to protect their real rate of return because

there will be the introduction of inflation linked bonds and inflation linked National Savings Certificates.

Conservative investors as well as senior citizens can make use of this opportunity when it becomes

available. This will ensure that the interest rates earned by the investor moves along with the changes in

the overall interest rates and hence there is protection in times when inflation rises in the economy.


19/24

Why Chidu's Lo-Cal budget is a flop-show-R. Jagannathan Editor, Firstpost at Network 18

If Palaniappan Chidambarams eighth Budget has not set themarkets on fire, it can be easily explained: his first goal wasto avoid doing damage to investor confidence, which is whathis predecessor managed to do. And unlike his own 2008budget, which set the stage for the economys long-termslide and made inflation intractable, Budget 2013-14 hastaken the middle path of low ambition and low risk.

There is thus nothing in it to excite anybody, not even his

own party. He has delivered on his promise of providing a responsible budget, which themarkets misunderstood to mean something that will send the adrenalin pumping. That was noton, and the FM restrained himself from any dose of excess populism.

A lo-calorie budget is not meant to energise anybody. It is meant to get the fat down.

If the markets are moping right now, with the Sensex and Nifty heading south, its becauseChidambaram has already given them enough room for optimism before the budget. The marketswanted more of the same, but he could not oblige.

A lo-calorie budget is not meant to energise anybody. It is meant to get the fat down.

Before we rush to condole those left out of accessing the meagre basket of goodies, it is worth

summarising the core proposals made in the budget. Chidambaram has raised Rs 18,000 croreof additional revenue through direct and indirect taxes, the former mostly by taxing companiesmore. Excise and customs remain more or less the same, with no changes in base rates.

The concessions, both to populism and the middle classes, are minor: there is a token Rs 10,000crore additional provision for Sonia Gandhis Food Security Bill, some very small personal incometax reliefs, and an additional deduction of Rs 1 lakh for interest paid on first home loans (over andabove existing Rs 1.5 lakh). Plus there are promises on new savings instruments sold throughpost offices that will be inflation-indexed. But these will not be more than sideshows to the mainavenues currently available for savings.

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20/24

Budget: Chidambaram plays safe; market disappointed-Santosh Nair Editor, Moneycontrol at Network 18

Much was expected of Finance Minister P Chidambaram in Budget2013 considering that he had marketed it aggressively to foreigninstitutional investors in the last few ways. To be fair, he hasdelivered on two key parameters: fiscal consolidation and a stabletax regime. But what the market was hoping from the architect of theDream Budget was some kind of a road map on how growth and theinvestment cycle could be revived in the near future. Also, on how

subsidies could be meaningfully lowered. And that is where he appears to have fallen short. It was nevereasy going to be raise taxes in a slowing economy, and to that extent, the status quo on key tax rates

should come as a relief even if was only to be expected. The only other way out for the Finance Ministerhas been to cut back on expenditure, which has been doing aggressively over the past few months. Butinvestors and the industry are questioning the wisdom of achieving fiscal targets through cost-cutting. At atime when private investments have dried up, a cutback in government spending could further crimpgrowth near term. While he has promised on a fiscal deficit target of 4.8 percent for next year, how heachieves that will be the key. The current years target was achieved by trimming Plan Expenditure byaround Rs 1 lakh crore.

On the positive side, the FM has not slashed Plan Expenditure for FY14 in a big way as many had feared.

The estimate of Rs 5.5 lakh crore is about 29 percent higher than the revised estimate of Rs 4.29 lakh

crore for FY13.

Additional provision for the Food Security Bill at Rs 10,000 crore was much lower than what the market

had feared. The subsidy bill for fuel, fertiliser and food together for FY14 is estimated at Rs 2.31 lakhcrore, lower than the revised subsidy bill of Rs 2.57 lakh crore for FY13. But market may take the subsidy

estimate for FY14 with a pinch of salt, considering that the revised estimate for FY13 was about 35

percent higher than the initial estimate.

The FM said that current account deficit was a bigger problem than fiscal deficit. But the Budget did not

have anything specific on how oil and gold imports will be curbed.

There has been a sharp increase (46 percent) in allocation to the Rural Development ministry, and that

was only to be expected considering that general elections are due in barely a year. The FMCG industry

must be hoping that a pickup in rural consumption should add to their bottomlines.

http://www.moneycontrol.com/news/budgetbrokerpoll/unionbudget2013-14chidambaramplayssafemarketdisappointed_832066.htmlhttp://www.moneycontrol.com/news/budgetbrokerpoll/unionbudget2013-14chidambaramplayssafemarketdisappointed_832066.html


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February 28th: History repeats itself?Menaka Doshi Corporate Editor, CNBC-TV18

"I have been at pains to state over and over again that India, at thepresent juncture, does not have the choice between welcoming andspurning foreign investment. If I may be frank, foreign investment is animperative." - P Chidambaram, Finance Minister

Thats how Finance Minister P Chidambaram opened his Budget speech on Thursday, striking the rightnote in a country starved of investments and faced with declining growth. He must have put a smile onthe faces of foreign investors...only to wipe it off an hour later.

"In order to remove the ambiguity that prevails on what is Foreign Direct Investment (FDI) and what isForeign Institutional Investment (FII), I propose to follow the international practice and lay down a broadprinciple that, where an investor has a stake of 10 percent or less in a company, it will be treated as FIIand, where an investor has a stake of more than 10 percent, it will be treated as FDI. A committee will beconstituted to examine the application of the principle and to work out the details expeditiously. - PChidambaram, Finance Minister

That was the first surprise. Till here the speech was going fairly well. He announced bits and bobs ofinfrastructure investments, put in an aggressive 4.8% fiscal deficit target, spoke of capital market reformand then suddenly threw in this half baked idea. Half baked because there are no details forthcoming.Indian budgets are high profile events...this one watched even more closely as it comes in anenvironment of declining growth and follows an epoch-making budget that include 24 retroactiveamendments. High profile events are not the place to showcase meagrely worded ideas, being introduced

for the first time. In a country home to complex, sectoral, foreign investment caps and confusing taxtreatments for different classes of foreign investors, to suddenly tell a foreign investor his category mightchange without his will, is not a good idea. I just wish this had been eased in via a separate discussionpaper, put through several rounds of debate and then proposed! But if think this is bad...think again.

"Some tax avoidance arrangements have come to notice, and I propose to plug the loopholes. Someunlisted companies have avoided dividend distribution tax by arrangements involving buyback of shares. Ipropose to levy a final withholding tax at the rate of 20 percent on profits distributed by unlistedcompanies to shareholders through buyback of shares. - P Chidambaram, Finance Minister

There's no denying that some MNC structures have used this loophole so the FM's misgivings arejustified as is his desire to plug the loophole. I could say the same about his next proposal.

http://thefirm.moneycontrol.com/story_page.php?autono=832490http://thefirm.moneycontrol.com/story_page.php?autono=832490


22/24

The Twitterati gloss over Chidambarams Budget

# Dr Manmohan Singh @PMOIndia

Given the challenges facing our economy, the Finance Minister has done a commendablejob.

# Narendra Modi @narendramodi

Budget 2013-14 showcases UPA's disconnect with the people! Unemployment & inflation

will continue to bother common man.

# Kiran Mazumdar Shaw @kiranshaw

Women have certainly occupied center stage in Budget 2013. I welcome all the women

oriented schemes announced by the FM.

# Pritish Nandy

"Wonderful. We cant stop rapes, crimes against women. But we want to open a bank for

women. As if women cant use normal banks!

#Amitabh Bachchan @SrBachchan

Ama yaar, jise apne ghar ke Budget ke bare mein pata nahin, woh desh ke Budget pe kya

bolega!

# Anand Mahindra

"No quarrel if ALL large cars taxed. Singling out SUV's destroys a level field. Sad, one has to

fight harder to succeed in one's own country"

# @Trendulkar

Keeping money in the blouse is the original women's bank.

# @kunalrao

Women's bank? Will they be closed once a month for 4 days?


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USEFUL LINKS

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