BUDGET IMPACT on various sectors

Here is a brief compilation of the effect this Budget will have on various sectors :

1.AUTOMOBILES : POSITIVE
Excise on 2 and 3 wheelers, small passenger cars reduced from 16% to 12%.

2.BANKING : POSITIVE with a caveat
PSU Banks are expected to face pressure on their net interest margins until the subsidy for waiver of agricultural loans and one time settlement of loans is released from the govt.

3.CEMENT : NEUTRAL
The govt. has increased budgetary allocation for roads under NHDP. This coupled with the govt.'s focus on Infrastructure & Housing development will be key drivers for raising demand. Appointing of a Coal regulator is a postive move as it will facilitate timely and proper allocation of coal (a key raw material) blocks to the core sectors, cement being one of them. From a differential excise duty levied last year, the budget proposes a flat rate of Rs.400 per MT bulk cement or 14% ad valorem, whichever is higher and cement clinkers excise duty at Rs.450 per MT. This move will not have much impact because most cement manufacturers have set up grinding units so they don't have to source clinker.

4.ENGINEERING AND CAPITAL GOODS : POSITIVE
Reduced excise duty on manufacturing goods will boost demand. Custom duties on project imports lowered. Overall, a good budget for engineering.

5.FMCG : POSITIVE
Reduction in taxes and waiver of farm loans will boost consumer demand. Increased consumption to boost volumes.

6.INFORMATION TECHNOLOGY : NEUTRAL
Higher spend on education is good news for training providers. But the service tax on customised software is a negative for technology companies but it will be passed on to the clients.

7.INFRASTRUCTURE : POSITIVE
Continued thrust on Infrastructure spending is good news. Major developmental schemes get vastly increased allocations. But service tax on works contract raised from 2% to 4%.

8.MEDIA : POSITIVE
Cheaper set top boxes is good news for direct to home operators and will help in digitisation of the TV Industry. More money for I&B Ministry.

9.OIL & GAS : NEUTRAL
No reduction in custom duties for crude oil and petroleum products. Marginally negative for polymer industry as costlier Naptha will push its cost structure upwards.

10.PHARMACEUTICALS : POSITIVE
Reduction in excise duty from the current 16% to 8% is a big positive for this industry. Increased allocation of funds for eradication of HIV/AIDS and polio and reduction in customs duty on certain life saving drugs from 10% to 5% is a positive for companies having product pipeline catering to these segments.

11.REAL ESTATE & CONSTRUCTION : NEUTRAL
Cut in peak CENVAT rate from 16% to 14% could benefit companies as raw material cost would come down. Increase in short term capital gains tax could increase tax liabilities for several companies.

12.RETAIL : NEUTRAL
Nothing specifically aimed at development of this sector. But Increase in threshold limit for personal income tax to result in a rise in disposable incomes thereby fuelling a growth in this sector.

13.TELECOM : NEUTRAL
Service tax, revenue sharing licence fee, spectrum charges unchanged. Cheaper data cards, convergence products. 1% excise duty on cellphones will make them more expensive.

14.TEXTILES : NEUTRAL TO POSITIVE
Integrated textile parks, upgradation gets a boost. Yarn banks on the anvil. Additional allocation to TUF to accelerate capital investment in the textile sector. Removal of National Calamity Contingent Duty (NCCD) of 1% on polyester filament yarn to benefit companies that have spinning capacities.

15.UTILITIES : NEUTRAL
Reduced 7.5% customs duty on project import to 5% to boost investments. Additional 4% duty of 4% withdrawn from power generation projects (other than mega power projects), transmission, sub-transmission and distribution projects, good for high voltage transmission projects.

Cheers!