Budget 2014 : Highlights

Dated – 11-07-2014

Macro Economics:
India estimates FY15 Budget Deficit to be at 4.1% of GDP and FY16 Budget Deficit at 3.6%. Government is also aiming at 7-8% growth in 3-4 years.  Also government will streamline tax administration. Fuel, LPG and oil subsidy will be target oriented.
Aims to approve goods and services tax by end of this year.
Government wants to keep control of the PSU Bank.

Personal Income Tax:
Personal income tax slab is raised to 2.5 lakh from 2 lakh, 3 lakh for Senior Citizen. 80C deduction increased to 1.5 lakh from 1 lakh.

Home Loan:
Interest on Home loan is now 2 lakhs from 1.5 lakhs for deduction.

Road Sector:
Allocation of Rs 37,000 crore for National & State Highway is positive for road sector. Keep watch on L&T, ITNL, IRB Infra, and Sadbhav Engg.

Rural Housing:
Higher allocation to rural housing is positive for Housing finance company. Keep watch on LIC Housing, GIC Housing, and Repco Home.

Realty:
Government focuses on affordable housing in this budget and cheaper housing loan & tax incentives for LIG (Lower Income Group). Government allocated Rs 4000 crore.
Rs. 7,060 crore for the project of developing 100 Smart Cities.
Requirement of the built up area and capital conditions for FDI reduced to 20,000 square metres and USD 5 million respectively for development of smart cities.

Insurance Sector:
Government proposes to increase FDI in insurance sector from 26% to 49%. Keep watch on Max India, Bajaj Finance, R-Cap.

Defence Sector:
FDI is defence sector is to be 49%. Keep watch on Astra Micro, BEML, M&M, L&T, and Walchandnagar.

Aluminium Sector:
Raises export tax on bauxite to 20 percent from 10 percent. Positive for Hindalco and Nalco as availability of bauxite will increase.

Fertiliser Sector:
New urea policy planned for the sector. Fertiliser subsidy bill forecast at 729.7 billion rupees for 2014/15. Keep watch on NFL, RCF, and Chambal Fertiliser.

Digitisation:
Govt proposes to launch 'Digital India’ programmes to ensure broad band connectivity at village level. Optical Fibre companies like Finolex cable, Sterlite Tech and Aksh Opti Fibres. Also keep an eye on D-Link.
National Rural Internet and Technology Mission for services in villages and schools, training in IT skills proposed.

Metro Station:
Rs 100 crore allocated for metro projects in Lucknow and Ahmadabad. City with over 2 million populations should get metro.
Keep eye on BEML, Hind Rectifiers.

PSU Bank:
Government set aside Rs 11,200 crore for PSU banks capitalization.
Keep eye on SBI, United Bank, Union Bank, UCO Bank.

Conclusion:
Budget is in line with the expectation. Government has tried to balance out expenditure and revenue in this budget. Positive steps were taken by Finance Minister in order to put confidence back. Government focus on de-bottle necking the infrastructure is positive for the economy.
Overall we give feel budget is good and positive for the market.