Te Pre-budget expectations from Geojit Comtrade and Geojit BNP Paribas Financial Services Ltd.
Budget Expectation: Mr. Renjith RG, National Head, Geojit BNP Paribas Financial Services Ltd for the upcoming Union Budget 2013
* Enhance 80 c to Rs 2 Lakhs
* Separate limit for Long term pension investments in 80 C
* RGESS to be made eligible for tax exemption with higher limit on recurring basis.
* Enhance Section 80D – Mediclaim and Health Insurance to Rs 50000.
* Interest deduction on home loans to be increased to higher level
Budget Expectation: Dr V.K. Vijayakumar, Investment Strategist, Geojit BNP Paribas Financial Services Ltd for the upcoming Union Budget 2013
All budgets are important; the Union budget for FY 2013 -14 is more so, since the Indian economy is seriously challenged and an imaginative budget can be a way out of the difficult times. The difficult global environment has aggravated the challenges being faced by the economy.
Indian economy grew only by 6.2 % in 2011-12. For FY 2012-13, the CSO estimates a growth rate of a mere 5 %. If this happens, it will be a ten year low for growth. Low growth and slower increase in tax collections will render macro management extremely problematic. It is crucially important to get economic growth back on track. This entails reversal of the declining trend in savings and investment rates.
The basic reason why growth rate has slipped is that savings and investment rates have fallen from 36.8% and 38.1% respectively in 2007-08 to 30.8 % and 34 %respectively by 2011-12. The savage monetary tightening resorted to by the RBI to control inflation also contributed to the slowdown. The poor global environment adversely affected exports. The twin deficits – fiscal deficit at 5.9 % and current account deficit at 5 % - unless quickly managed might invite a credit rating downgrade.
Finance Minister P Chidambaram has an onerous responsibility to manage this difficult scenario. Will the FM, well known for his vision and competence, deliver?
First and foremost, economists expect fiscal prudence in the budget. The FM is likely to contain this year’s fiscal deficit at 5.3 % and make a projection of 4.8 % for 2013-14 as he has already gone on record on this in his road shows abroad.
To achieve the F D target for 2013-14, he is likely to go in for additional resource mobilization. A further 2 % increase in excise duty cannot be ruled out even if it will be inflationary.
There have been suggestions regarding introduction of a new tax rate for the super rich, say, 40 % for those earning above 25 lakhs. This may materialise.
Our expectations regarding the budget are summarised below:
Measures to boost savings. Tax concessions for increased savings.
Raising the exemption limit for personal income tax to say Rs 2.5 lakhs.
Widening the scope of Rajiv Gandhi Equity Savings Scheme.
Disinvestment target of Rs. 50000 crores.
Rationalization of STT i.e., reduction of STT on deliveries.
It is quite likely that there will be indications in the budget regarding DTC and GST and a time table for their role out.
Budget Expectation: Mr. Satish Menon, Executive Director, Geojit BNP Paribas Financial Services Ltd for the upcoming Union Budget 2013
On the macro side, I expect the budget to focus on the fiscal consolidation and the measures taken to reduce the deficit, implementation of DTC and GST.
On the stock market side, we need to get a implementable plan to increase the participation in the capital market and some specific measures, like say, elimination of short term capital gains tax, maybe reduction in STT charges.
Budget Expectation: Mr. Sharad Sharma, Executive Director, Geojit BNP Paribas Financial Services Ltd for the upcoming Union Budget 2013
Market would keenly watch the budget for details on Good and Services tax which can simplify tax structure and also perhaps help to improve GDP growth rates by approx 1%. Road map for fiscal consolidation and measures to cap subsidy, implementation of cabinet committee on investments to fast track infrastructure projects, increase in infrastructure spending to revive the investment climate and growth, measures to contain Current Account Deficit which could mean higher tax on import of Gold and measures to boost exports. We hope the Govt announces a balanced budget which should be cheered by the markets.
Budget Expectation: Mr. Sanil Kumar, Head Sales, Geojit BNP Paribas Financial Services Ltd for the upcoming Union Budget 2013
Budget 2013-14 is likely to be more sensible than populist. The previous budget was a disappointment. Considering the current economic scenario, expecting the Union Budget to come out with strong measures and economy boosters to restore confidence and spur growth.
The government will achieve a lower fiscal deficit through spending cuts and higher taxes. There is talk of raising taxes for the higher income brackets but that will be seen as anti-reformist budget. The government may impose tax on commodity derivatives in the budget 2013-14, industry bodies have already demanded exemption to such transaction tax. Commodity derivatives are hedging instruments and "Transaction tax can only increase the cost of hedging and discourage the genuine hedgers. The FM is expected to make a special provision in the budget for employment generation and also expecting to increase RGESS scheme to Rs. 1 lakh.
I think the markets will welcome a budget that is realistic, practical and if global equities stay firm, Indian equities and the currency can see a strong rally after the budget. So it is going to be a very interesting year and the best part about this is that there are people who are bearish and there are people who are bullish, that is going to be very interesting for the stock markets, this year.
Budget Expectation: Mr. Viral Shah, Head Institutional Business Geojit Comtrade Ltd for the upcoming Union Budget 2013 for commodity market.
The commodity market in India has witnessed some policy changes in the run up to the budget 2013. There has been imposition of duty on palm oil after many years and also enhancement on the import duty for bullion. Some of these have been sought by the trade and for bullion, it has been imposed to curb the rise in the consumption of gold which is creating a stress on our deficit. The biggest expectation from the budget is to know the stance of the government on the commodity transaction tax (CTT). There has been a lot of noise regarding the imposition of CTT to keep the commodities market on par with the securities segment where STT is levied. However, for the commodities market, where a large number of participants are hedgers, it will increase the transaction cost substantially and may also dry up liquidity.
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