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http://content.icicidirect.com/mailimages/ICICIdirect_UnionBudget_2012-13.pdf
Table of Content
Along expected lines!!!.................................................... 1
How have finances stacked up in FY12............................ 3
What’s in store for FY13??? ............................................. 4
Borrowings/disinvestment: Critical .................................. 5
Subsidy and allocation to schemes.................................. 7
Trends in fiscal performance............................................ 8
Crude – key for petroleum subsidy................................. 11
Hits and Misses ............................................................. 12
Sectoral Expectations .................................................... 13
Along expected lines!!!
Budget 2012-13 has been an honest Budget bringing together ground
realities with continued focus on fiscal consolidation. The expected
fiscal deficit of 5.1% and full rollback of impetus by hiking excise duty
and service tax rate will help in achieving the targeted fiscal deficit in
2012-2013. This seems achievable given oil prices do not surprise on
the negative side and the government is able to hike petroleum
product prices. Also, through small steps, the Budget has focused on
issues in the infrastructure sector (coupled with focus on promoting
avenues for infrastructure funding [doubling the corpus of tax free
bonds], hiking FII limits in the debt segments and initiatives for
enhancing retail investor participation). On the whole, the
government is banking on tax revenue buoyancy to bring fiscal
deficit under control without derailing the focus on expenditure
(plan and non plan expenditure to rise 22% and 9% YoY,
respectively).
• There has been a rollback of excise and service tax rates by
2% each, coupled with broadening of the net for a range of
services. The government has budgeted a rise of 29% and
30% in the excise and service tax collections, respectively. For
FY12, excise collections saw a decline of 8% over FY12BE
figures while service tax figures exceed FY12BE by ~16%
• In terms of tax collections, the government has budgeted total
receipts growth of 13.1% over FY12RE. Growth in corporation
tax is budgeted in line with 14% nominal GDP growth rate for
FY13E
• The government has also taken baby steps to get aligned to
the template of DTC and GST, even though a definite timeline
for implementation of the same has not been mentioned
• Disinvestment proceeds for FY12 stood at | 14000 crore, in
line with expectations. For FY13E, the government has built in
| 30000 crore of receipts from the same. Though realistic, a
positive global equity environment can help in achieving the
same
• Total major subsidies budgeted for FY13E stands at ~|
1,80,000 crore, down 13.8% compared to the revised subsidy
for FY12. The decline mainly came due to a 36% decline in
accounting of petroleum subsidy for FY13E vis-à-vis FY12
revised subsidy. Our calculation shows that at $115/ barrel
assumption for crude prices, a | 5 hike in diesel prices and
49% government share in under-recoveries, the given subsidy
figure looks feasible. If the government is unable to pass on
the desired price hike, the fiscal deficit would reach 5.5%
(other things remaining constant). On the other hand, the
government has budgeted for ~| 61000 crore and | 75000
crore for fertiliser and food subsidy, respectively, for FY13E
• Initiatives like permitting two way fungibility in IDRs to
encourage wider foreign participation in Indian capital market
and enhancing limits for FII participation in debt instruments
would provide robust channel for funding capex of
infrastructure creation. Further, new initiatives like Rajiv
Gandhi Equity Scheme have been proposed to encourage
direct equity participation from retail investors
• Though the government has pegged a 5.1% deficit target for
FY13E, better than our estimates of 5.3%, we believe the
direction of oil prices will play a crucial role in determining the
achievability of the target. Also, the net borrowing figure is a
tad higher than expected and will keep bond yields at elevated
level for H1FY13 at least
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_UnionBudget_2012-13.pdf
Table of Content
Along expected lines!!!.................................................... 1
How have finances stacked up in FY12............................ 3
What’s in store for FY13??? ............................................. 4
Borrowings/disinvestment: Critical .................................. 5
Subsidy and allocation to schemes.................................. 7
Trends in fiscal performance............................................ 8
Crude – key for petroleum subsidy................................. 11
Hits and Misses ............................................................. 12
Sectoral Expectations .................................................... 13
Along expected lines!!!
Budget 2012-13 has been an honest Budget bringing together ground
realities with continued focus on fiscal consolidation. The expected
fiscal deficit of 5.1% and full rollback of impetus by hiking excise duty
and service tax rate will help in achieving the targeted fiscal deficit in
2012-2013. This seems achievable given oil prices do not surprise on
the negative side and the government is able to hike petroleum
product prices. Also, through small steps, the Budget has focused on
issues in the infrastructure sector (coupled with focus on promoting
avenues for infrastructure funding [doubling the corpus of tax free
bonds], hiking FII limits in the debt segments and initiatives for
enhancing retail investor participation). On the whole, the
government is banking on tax revenue buoyancy to bring fiscal
deficit under control without derailing the focus on expenditure
(plan and non plan expenditure to rise 22% and 9% YoY,
respectively).
• There has been a rollback of excise and service tax rates by
2% each, coupled with broadening of the net for a range of
services. The government has budgeted a rise of 29% and
30% in the excise and service tax collections, respectively. For
FY12, excise collections saw a decline of 8% over FY12BE
figures while service tax figures exceed FY12BE by ~16%
• In terms of tax collections, the government has budgeted total
receipts growth of 13.1% over FY12RE. Growth in corporation
tax is budgeted in line with 14% nominal GDP growth rate for
FY13E
• The government has also taken baby steps to get aligned to
the template of DTC and GST, even though a definite timeline
for implementation of the same has not been mentioned
• Disinvestment proceeds for FY12 stood at | 14000 crore, in
line with expectations. For FY13E, the government has built in
| 30000 crore of receipts from the same. Though realistic, a
positive global equity environment can help in achieving the
same
• Total major subsidies budgeted for FY13E stands at ~|
1,80,000 crore, down 13.8% compared to the revised subsidy
for FY12. The decline mainly came due to a 36% decline in
accounting of petroleum subsidy for FY13E vis-à-vis FY12
revised subsidy. Our calculation shows that at $115/ barrel
assumption for crude prices, a | 5 hike in diesel prices and
49% government share in under-recoveries, the given subsidy
figure looks feasible. If the government is unable to pass on
the desired price hike, the fiscal deficit would reach 5.5%
(other things remaining constant). On the other hand, the
government has budgeted for ~| 61000 crore and | 75000
crore for fertiliser and food subsidy, respectively, for FY13E
• Initiatives like permitting two way fungibility in IDRs to
encourage wider foreign participation in Indian capital market
and enhancing limits for FII participation in debt instruments
would provide robust channel for funding capex of
infrastructure creation. Further, new initiatives like Rajiv
Gandhi Equity Scheme have been proposed to encourage
direct equity participation from retail investors
• Though the government has pegged a 5.1% deficit target for
FY13E, better than our estimates of 5.3%, we believe the
direction of oil prices will play a crucial role in determining the
achievability of the target. Also, the net borrowing figure is a
tad higher than expected and will keep bond yields at elevated
level for H1FY13 at least
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