Budget Snapshot

16 March 2012

IIFM Research Desk research@iifm.co.in

In the present economic scenario, this budget seems to be a balanced policy document. The Finance Minister has tried to meet the challenge of increasing financial deficit through increasing taxes and decreasing subsidies. Major emphasis has been on developing infrastructure and social reforms. The following are the most discussed points of this years budget. -IIFM Research Team. BUDGET ESTIMATES Fiscal deficit targeted at 5.1 per cent of GDP in 2012 13, down from 5.9 per cent in 2011 12; central Government debt at 45.5 per cent of GDP. Gross Tax Receipts estimated at Rs. 10,77,612 crore, 15.6 per cent higher than original budget estimates and 19.5 per cent over the revised estimates for 2011 12. Net Tax to the Centre in 2012 -13 budgeted at Rs. 7,71,071 crore; Non-Tax Revenue Receipts estimated at Rs. 1,64,614 crore and Non-debt Capital Receipts at Rs. 41,650 crore. Total expenditure for 2012 13 budgeted at Rs. 14,90,925 crore, including Rs. 5,21,025 crore of plan Expenditure and Rs. 9,69,900 crore as Non-Plan Expenditure. TAXES Customs duty on gold and platinum doubled to 4%, for Jewellary doubled to 10%. Tax burden for individuals to come down: Income tax exemption limit raised from Rs. 1,80,000 to Rs. 2,00,000; 10 per cent tax for 2-5 lakh income; 20 per cent for 5-10 lakh and 30 per cent beyond Rs. 10 lakh; Savings bank account interest up to Rs. 10,000 exempted from tax. No change in corporate tax rate, but standard rate of excise duty, as also service tax rates, raised from 10 per cent to 12 per cent. DIRECT TAX The new tax slabs: Income upto Rs 2 lakh No tax Rs 2 lakh Rs 5 lakh 10% Rs 5 lakh Rs 10 lakh 20% Rs 10 lakh and up 30% CAPITAL MARKET A new equity savings scheme to extend income tax deduction of 50 percent to those who invest up to Rs 50,000 in equities and whose annual income is less than Rs. 10 lakh. Securities Transaction Tax on cash delivery reduced by 20 per cent to 0.1 per cent; A new Rajiv Gandhi Equity Saving Scheme to allow income tax deduction to retail investors in stocks. REVENUE SOURCES Rs. 30,000 crore to be raised from disinvestment. Capital boost to financial and infrastructure sectors: Rs.15,888 crore to be provided for capitalization of public sector banks and financial institutions; Infrastructure investment of Rs. 50 lakh crore in 12th period, with half from private sector; Tax free bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects.

Corporate Training Financial Research Page 2 Workshops & Seminars of financial markets

www.iifm.co.in

Budget Snapshot

IIFM Research Desk IIFM Research Desk research@iifm.co.in research@iifm.co.in

TAX REFORMS Tax reforms: Direct Taxes Code (DTC) at earliest; GST network to be operational by August 2012; Central Excise and Service Tax being harmonized. A General Anti Avoidance Rule (GAAR) to be introduced to counter aggressive tax avoidance. AGRICULTURAL REFORM Interest subvention for short-term crop loans to farmers at 7 per cent interest continues; additional 3 percent for prompt paying farmers. Kissan credit cards to be modified to make than into smart cards to be used at ATMs. Target for agri-credit hiked Rs 5,75,000 crore. BLACK MONEY

White paper on black money is current session of Parliament; Introduction of compulsory reporting requirement for assets held abroad; tax collection at source on high-value cash purchase of bullion, jewellary, immovable property and trading in coal, lignite and iron ore.
INFRASTRUCTURE REFORM

NRHM allocation hiked to 20820 crores Aim to build Rs 9,000 km new roads Allocation of funds for mid-day meal Rs. 11,937 cr Rs 5,000 cr venture fund for small and micro sector Agriculture outlay increased by 18 per cent No new polio case reported in last one year Rs 20,000 crore for rural infrastructure development fund, of which Rs 5,000 crore specifically for warehouses. Budgetary allocation for rural, water and sanitation schemes hiked by 27% to Rs 14,000 crore. To provide Rs 10,000 crore to Nabard for refinancing regional rural banks.
SOCIAL SECTOR

Disability pension hiked to Rs 300 per month Interest subsidy for women SHGs up to Rs 3 lakh at 7 per cent; 3 per cent more for SHGs that repay promptly. Allocation to National Rural Livelihood Mission for women increased by 34 per cent. NRHM allocation of Rs. 20,822 crore from Rs 18,115 crore. PPP schemes for 2,500 schools announced. Credit guarantee fund for loans to students.

Corporate Training Financial Research Page 3 Workshops & Seminars of financial markets

www.iifm.co.in

Budget Snapshot
From IIFM Institutional Equities Desk
1. Initiating Coverage 2. IPO Note 3. Result Preview 4. Result Review 5. Event Update 6. Economic Update 7. Commodity Outlook 1. Impact 2. Market Mirror 3. Match

IIFM Research Desk research@iifm.co.in

In depth analysis coupled with detailed explanation of investment rationale In depth analysis of an IPO with a recommendation for the same Prediction of results to be announced with a view on margins for the stock Analysis of the results and view on the stock after the results Analysis of stock/sector specific event which has occurred and its impact Analysis of IIP, GDP, Inflation and six core industries Future outlook on bullion, base metals and energy products

Technical Reports
Technical guide giving a long term view on index and stocks Technical guide giving a short term view on index and stocks Technical analysis of Dollar index and its constituents against INR

Derivatives Research Products

1. Pair Trades 2. NIFTY Strategies 3. Arbitrage Trades 4. Numero-Mania 1. Morning Glance 2. Post Market Update 3. Currency Update 4. Commodity Update 5. Derivatives Daily 6. Derivatives Weekly 7. Rollover Analysis Identification of stock pairs based on co integration and correlation Strategies based on market view e.g., straddle, skew, condor etc Cash Future and Special Situation Arbitrage Monthly repository of trading strategies from the Derivatives Desk

Daily Reports
Daily update of global news before the Indian markets open Daily market action and key statistics in a nutshell Analysis of the domestic currency market with an outlook for the day Snapshot of the commodity market with an outlook for the day Daily update of the activities in the Derivatives segment Weekly update of the activities in the Derivatives segment Daily analysis of the rolls during the expiry week every month

Corporate Training Financial Research Workshops & Seminars of financial markets

www.iifm.co.in

Budget Snapshot
Disclaimer:

IIFM Research Desk research@iifm.co.in

The news and views expressed in this newsletter are entirely for informative purpose and is solely intended for the addressee(s). IIFM does not warrant the accuracy, adequacy or completeness of this information and material and expressly disclaims the liability for errors or omissions in this newsletter. The information and opinion on which this newsletter is based has been compiled or arrived at from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, correctness and are subject to change without notice. Foreign currency investment as discussed in this newsletter have high level of volatility and can often result in extreme payoffs and thus be exercised with due caution. Although every effort has been made by the research team to provide the investors right information IIFM shall not assume any legal liability or responsibility for any incorrect, misleading or altered information contained herein.

Corporate Training Financial Research Workshops & Seminars of financial markets

www.iifm.co.in