Also, road map for several economic reforms which are touted as game changers for India like GST, DTC, land acquisition bill, FDI in insurance and pension is expected.
Following are the list of expectations sector wise.
There have been talks about additional excise duties on diesel cars which were mainly aimed to bring down the under-recoveries of the oil PSUs. However, considering that the auto space, is already struggling with its sales numbers with every passing month, an additional burden on diesel cars will prove to be a negative for several auto companies.
The next hopeful move from this space is in the form of special schemes under Jawaharlal Nehru National Urban Renewal Mission for the commercial vehicle segment which has witnessed steep de-growth.
This is one space which has been languishing for quite a few years now. The key Budget expectation for the aviation industry is to include ATF under declared goods and reduction in airport related charges.
Banks & NBFCs
PSU banks have been in news off late for their increasing NPAs thanks to their exposure in stressed pockets like infrastructure, aviation, agriculture etc. Hence it is only logical for them to wish for capital infusion or recapitalization as it will prove to be helpful in providing support to lending activities.
The other major expectation is relaxation in lock in period for savings in order to qualify for tax benefits under Section 80C. This is to help make term deposits more attractive and at par with other instruments which are of tax saving nature.
Related to the above point is the increase in TDS limit on interest on bank deposits. Currently any gains of above Rs. 10,000 attract TDS. This level is anticipated to be revised higher to Rs.50, 000.
Another move in the banking space is the increase in agri lending targets. The Government is likely to go through this announcement as this increase will be pushed under financial inclusion. However, it will be a drag on the PSU banks as this segment has been steadily turning into NPAs.
Increase in FDI limit for insurance companies from 26% to 49% is another key announcement which is expected as this move will provide capital to cash strapped insurance companies.
Capital Goods have been under tremendous pressures due to sluggish capex cycle, delay in project off take due to clearances required from various departments etc. The key expectations are as follows:
In order to provide a thrust to the fiscal consolidation stand adopted by the Government, reduction in Government spending Budget and service tax on power projects is likely.
For the power space, fund allocation for T&D activities are expected to continue as it provides continues business opportunity. Also, there are hopes for some budgetary provision for restructuring of state owned power distribution companies.
There are no major changes expected in the cement sector as the current scheme of excise duty is expected to remain the same. Any other plus for this space will come in the form of announcements of infra projects like highways, freight corridors etc which will boost cement demand.
This is another space which has been in the negative over the past 12 months as spiraling commodity prices, high interest rates and inflationary pressures have been proving a major challenge for those engaged in construction business. This year's Budget is expected to provide some relief in the form of dedicated infra debt bonds and tax benefits made in infra bonds which will help provide long term funding which will give a major impetus to the sector.
Revamping the National Investment Board to ease bottlenecks in implementing large scale projects is vital. Though a bit stretched to wish for, MAT being abolished for the tax holiday period under Session 80 IA to improve the viability of projects.
Continued focus and increase in focus of allocation of resources towards projects like NREGA and the likes will lead to increase in disposable income which will be a positive for this space.
Implementation of GST would be a huge help for FMCG space as this will cut out multiple taxes like Value added Tax (VAT) and excise duties.
Cigarette companies will be hoping for no hike or marginal hike in excise duties on cigarettes after the huge jump witnessed in the last Budget.
Industry body, NASSCOM expects MAT on SEZ units to be removed as this will be a huge advantage to all the companies operating in various SEZ units.
There are not many changes expected in this pocket. The only ones being increase in import duty on manganese ore and decrease in export duty on low grade fines.
Oil & Gas
Oil Marketing Companies are expecting pricing of Diesel and Petrol on the basis of trade parity rather than export parity. Also, tax holidays set during the 12th five year plan is another demand. Another change than can come in this sector is the introduction of 5% customs duty on crude oil.
Author: Aditya Prasad, Chief Evangelist @Perfios Software.