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India Budget 2009 10 Highlights Preliminary Rep VRK100 06072009

India Budget 2009 10 Highlights Preliminary Rep VRK100 06072009

Ratings: (0)|Views: 106|Likes:
Rama Krisna Vadlamudi, MUMBAI, INDIA (vrk_100@yahoo.co.in) explains the highlights of India Budget 2009-10 announced on July 6th, 2009.
This is just a preliminary report before the budget's fineprint is read or understood completely by the experts.

It also gives the overall rating for the budget and the MACRO ASSESSMENT from the author's viewpoint.
Rama Krisna Vadlamudi, MUMBAI, INDIA (vrk_100@yahoo.co.in) explains the highlights of India Budget 2009-10 announced on July 6th, 2009.
This is just a preliminary report before the budget's fineprint is read or understood completely by the experts.

It also gives the overall rating for the budget and the MACRO ASSESSMENT from the author's viewpoint.

More info:

Published by: RamaKrishna Vadlamudi on Oct 08, 2009
Copyright:Attribution Non-commercial No-derivs

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10/14/2009

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COMPILED BY: Rama Krishna Vadlamudi, Mumbai – Dt. July 6, 2009 
Page 1 of 3 
HIGHLIGHTS OF THE UNION BUDGET PRESENTED BY THEFINANCE MINISTER IN INDIAN PARLIAMENT ON JULY 6, 2009:
 
POSITIVES: 
There are no changes in the Corporate Tax (except for MAT)
No new taxes have been proposed in the Budget (as per the cursoryreading of the Budget – the budget’s fineprint is yet to be unveiled)
No changes in indirect taxes – service tax and Cenvat reductions ofprevious year are maintained at the same level
Fringe Benefit Tax is scrapped
Commodity Transaction Tax is scrapped
Goods and Service Tax is expected to be introduced from April 1, 2010
Software Technology Parks of India (STPI) scheme’s tax exemption isextended by one more year up to 2011 (positive for IT sector)
Govt will get Rs 35,000 crore by auctioning of 3G spectrum to telecom cos
More allocations are made to social sectors, roads (NHAI), rural roads,urban projects, Bharat Nirman, Railways, Rural Housing, etc
Unique ID project for all citizens gets an allocation of Rs 120 crore
Public float of listed companies will go up from the present 15% (this istelling in an indirect manner that the Govt will sell some stake in Govt cos)
Total expenditure of the GOI has crossed Rs 10 lakh crore for the firsttime since Independence (in the first budget after independence, GOI’stotal expenditure was only Rs 193 crore)
Personal IT slabs have been slightly increased by Rs 15,000 for seniorcitizens and by Rs 10,000 for others
Investment allowance for companies in certain sectors, like, gas pipelines,cold storage, etc. has been raised
The FM has not re-introduced the long-term capital gains tax (in place ofSTT) as has been feared by several marketmen
A new Direct Tax Code will be unveiled in 45 days
IIFCL will give 60% funds to Banks for PPP projects
 
COMPILED BY: Rama Krishna Vadlamudi, Mumbai – Dt. July 6, 2009 
Page 2 of 3 
NEGATIVES: 
o
Government’s borrowing from the market is at around Rs 4 lakh crore,higher by Rs 40,000 crore compared to projections in Feb. 2009(Bond market has reacted negatively to this figure – Banking stockshave fallen heavily as a result)
o
Higher fiscal deficit and more than expected government borrowing,combined with nil receipts from DISINVESTMENT have made themarkets to believe that the interest rates are going to go up in themedium term – which may not be good corporate profits
o
State Governments are allowed to borrow more from the market
o
This fiscal expansion is, in fact, a double-edged sword (
one way to see it is it boosts expenditure which is good for the economy and in another way it is a negative for bond market)
o
 The policies that are liked by market players and experts have notbeen articulated by the FM in his budget speech
(The government is still stuck in its socialistic mindset and indoctrination,
at least,outwardly 
– the authorities don’t want to give any impression that the budget’s big picture is for the benefit of financial markets. The UPAGovernment still believes that their re-election is due to their cheap populism of yester years. The Congress party over the years has mastered the art of given confusing signals and satisfy the public with little sops. Ministers tell something and at the same time; government secretaries and economic advisors and other cohorts confuse the markets with expressing contradictory views)
o
Minimum Alternative Tax (MAT) has gone up from 10% to 15%(negative for companies, like, Reliance Industries and RelianceCommunications who historically pay considerably lesser taxes yearafter year)
o
May be, the government’s policies have not been well articulated in amanner that is palatable to the financial markets
o
No policy is announced in relation to freeing of fuel prices (petrol,diesel, LPG, etc) – instead, a new committee is set up (somehow, weare fond of setting up committees without bothering to implement theirrecommendations)
o
The budget speech is a bit silent about disinvestment target, increasein FDI limit in insurance, banking consolidation, sops for housingsector and new timelines for FRBM Act

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