Kochi, March 9
Southern India Chartered Accountants Students Association of The Institute of Chartered Accountants of India's (ICAI) Ernakulam Branch organised a workshop on the Union Budget at ICAI Bhawan, Ernakulam. Mr Vivek Krishna Govind, Chairman, Ernakulam Branch, inaugurated the workshop. Mr Sherry Samuel Oommen from KPMG and Mr Jose Jacob presented papers on ‘Direct Tax Proposals' and ‘Indirect Tax Proposals' respectively. Mr Saji Mathew, Chairman SICASA, and Vice-Chairman of the Ernakulam Branch, presided over the function and Mr Balagopal R, Chairman Academic Affairs Committee Ernakulam Branch, gave a special address on the occasion. Around 200 CA students from the Ernakulam District participated in the workshop. – Our Bureau
Thursday, September 2, 2010
Funds for NREGA stepped up
In the words of Mahatma Gandhi “Just as the universe is contained in the self, so is India contained in the villages”. For UPA Government, development of rural infrastructure remains a high priority area. For the year 2010-11, I propose to provide Rs 66,100 crore for Rural Development.
Mahatma Gandhi National Rural Employment Guarantee Scheme has completed four years of implementation during which it has been extended to all districts covering more than 4.5 crore households. The allocation for NREGA has been stepped up to Rs 40,100 crore in 2010-11. Bharat Nirman has made a substantial contribution to the upgradation of rural infrastructure through its various programmes. For the year 2010-11, I propose to allocate an amount of Rs 48,000 crore for these programmes.
Indira Awas Yojana is a popular rural housing scheme for weaker sections. Taking note of the increase in the cost of construction, I propose to raise the unit cost under this scheme to Rs 45,000 in the plain areas and to Rs 48,500 in the hilly areas. For the year 2010-11, the allocation for this scheme is being increased to Rs 10,000 crore.
As a part of the strategy to bridge the infrastructure gap in backward districts of the country, the Backward Region Grant Fund has proved to be an effective instrument. I propose to enhance the allocation to this fund by 26 per cent from Rs 5,800 crore in 2009-10 to Rs 7,300 crore in 2010-11. I have also provided an additional central assistance of Rs 1,200 crore for drought mitigation in the Bundelkhand region in the Budget.
Mahatma Gandhi National Rural Employment Guarantee Scheme has completed four years of implementation during which it has been extended to all districts covering more than 4.5 crore households. The allocation for NREGA has been stepped up to Rs 40,100 crore in 2010-11. Bharat Nirman has made a substantial contribution to the upgradation of rural infrastructure through its various programmes. For the year 2010-11, I propose to allocate an amount of Rs 48,000 crore for these programmes.
Indira Awas Yojana is a popular rural housing scheme for weaker sections. Taking note of the increase in the cost of construction, I propose to raise the unit cost under this scheme to Rs 45,000 in the plain areas and to Rs 48,500 in the hilly areas. For the year 2010-11, the allocation for this scheme is being increased to Rs 10,000 crore.
As a part of the strategy to bridge the infrastructure gap in backward districts of the country, the Backward Region Grant Fund has proved to be an effective instrument. I propose to enhance the allocation to this fund by 26 per cent from Rs 5,800 crore in 2009-10 to Rs 7,300 crore in 2010-11. I have also provided an additional central assistance of Rs 1,200 crore for drought mitigation in the Bundelkhand region in the Budget.
Bring down VAT on cement
rapidly progressing infrastructure sector in India can help us achieve what we have done in the last 60 years in a span of just six years now. We urge the Government to focus aggressively on infrastructure development by way of increasing the investments in, and incentivising, the industry. This will accelerate the growth in cement industry and will go a long way towards overall economic development.
The industry also wants the value added tax (VAT) rate on cement brought from 12.5 per cent to 4 per cent in line with other important construction materials such as steel. Further, the industry expects cement to be included in the “Declared Goods” such as steel.
We seek the support of the Central and State governments to promote concrete roads instead of bituminised roads. The maintenance cost of concrete roads is quite low compared to the bituminised roads. Moreover, the erosion is low and they have a longer life. Also the wear and tear of motor vehicles is low when they ply on concrete roads. The move will also bring in fuel cost savings.
There is no impact on inflation (weightage of cement in WPI is 1.7 per cent only). Lifting of export ban will encourage investment in new capacities. Indian cement industry will otherwise lose out the opportunity in West Asia to other countries such as Pakistan.
Coal linkages and allocation of coal blocks: Supply of coal at linkage price to cement industry was cut to 75 per cent recently. Coal India modified the commitment in the fuel supply agreement (FSA) to 45 per cent at linkage rates, which will further increase the energy costs. Many cement plants are completely dependent on imported coal. The Government should immediately restore 100 per cent coal linkages and allocate coal plants to cement industry (both existing and new) on priority basis
Puneet Dalmia,
Managing Director, Dalmia Cement (Bharat) Ltd
The industry also wants the value added tax (VAT) rate on cement brought from 12.5 per cent to 4 per cent in line with other important construction materials such as steel. Further, the industry expects cement to be included in the “Declared Goods” such as steel.
We seek the support of the Central and State governments to promote concrete roads instead of bituminised roads. The maintenance cost of concrete roads is quite low compared to the bituminised roads. Moreover, the erosion is low and they have a longer life. Also the wear and tear of motor vehicles is low when they ply on concrete roads. The move will also bring in fuel cost savings.
There is no impact on inflation (weightage of cement in WPI is 1.7 per cent only). Lifting of export ban will encourage investment in new capacities. Indian cement industry will otherwise lose out the opportunity in West Asia to other countries such as Pakistan.
Coal linkages and allocation of coal blocks: Supply of coal at linkage price to cement industry was cut to 75 per cent recently. Coal India modified the commitment in the fuel supply agreement (FSA) to 45 per cent at linkage rates, which will further increase the energy costs. Many cement plants are completely dependent on imported coal. The Government should immediately restore 100 per cent coal linkages and allocate coal plants to cement industry (both existing and new) on priority basis
Puneet Dalmia,
Managing Director, Dalmia Cement (Bharat) Ltd
Budget session begins
The President, Ms Pratibha Patil, arrives with the Prime Minister, Dr Manmohan Singh, to the central hall of Parliament House to attend the opening day of the Budget session in the Capital on Monday. The Union Minister for Parliamentary Affairs, Mr Pawan Kumar Bansal, is also seen. —
Sustain the infrastructure investments'
. Murali
Chennai, Feb. 18
India should look at infrastructure to lead the economy rather than just supporting the economic growth, says Mr Amrit Pandurangi, Leader Infrastructure Practice, PricewaterhouseCoopers, in the course of a recent pre-Budget interaction with Business Line, over the email.
Excerpts from the interview.
What are the vital things that the Budget should address as far as infrastructure is concerned?
At the beginning of the current 5-Year Plan, the Government targeted a very substantial increase in infrastructure investments during the Plan. $500 billion was the Plan target with a substantial share going to the power and road sectors. The Government targeted nine per cent of GDP for infrastructure investment by the end of 5-year Plan (2012) from about 4 per cent of GDP at the beginning of the Plan period.
It is heartening to note that despite the world economic crisis and the consequent difficulties of financing major infrastructure investments, we are likely to achieve the 2012 target of 9 per cent of GDP.
It is reported that we are likely to be achieving close to 8 per cent in the current year itself and thus not miss the end of Plan target.
However, what is extremely important is to sustain the infrastructure investments.
The present Budget, therefore, should aim at doing everything right for sustaining investments into roads, power, ports, urban infrastructure, etc. on a year-on-year basis.
This will not only help economy in the long run, but will also result in addressing the more immediate issues of quicker economic recovery and employment creation.
India should clearly look at infrastructure to lead the economy rather than just supporting the economic growth.
What do you consider can be the desirable policy changes for the infrastructure sector?
There has been a lot of debate about significant policy changes to liberalise the economy across all sectors. We are lucky to see that the policies in the infrastructure have always been a little ahead of the curve as far as liberalisation is concerned.
Whether we are talking about the FDI policy or the policy of private investment into infrastructure or indeed the several policies of going more open and global in the infrastructure sectors, one can complement the Government on the good and progressive policies that we have seen.
While one can argue that there is further improvement and further liberalisation that is required in some of these policies, I think we have done quite well and can continue to evolve our policies towards more liberalisation in a gradual manner.
What is, however, required is consistency and stability of the policies, so that infrastructure investors – be they Indian or overseas – come in a bigger way, for the longer term and offer better value to the users.
Financial investors into infrastructure, such as the infrastructure funds, insurance companies and PE (private equity), can be attracted in a much more targeted and focused manner by having more consistent and stable infrastructure policies.
The Budget can do its bit towards this by ensuring that at least the fiscal concessions provided to infrastructure sectors and allocations made towards these sectors are more definitive, more consistent and indicative of a longer term stable regime.
Another important policy that the Budget can initiate the discussion on, and give an indicative incentivisation position, is the issue of sustainability of infrastructure investments. Heavy capital investments made need equally significant and assured financial allocations for maintenance of assets created.
With the entire country's focus being clearly on creation of new assets across infrastructure sectors, it is important to realise that there is no point having large allocations without corresponding allocations for maintaining the asset base created.
This is applicable even for PPP projects where the maintenance expenses have to be incurred by the private operator but he needs assured cash flows from the business (in quite a few cases the assured income comes from budgetary allocations towards annuity payments).
Chennai, Feb. 18
India should look at infrastructure to lead the economy rather than just supporting the economic growth, says Mr Amrit Pandurangi, Leader Infrastructure Practice, PricewaterhouseCoopers, in the course of a recent pre-Budget interaction with Business Line, over the email.
Excerpts from the interview.
What are the vital things that the Budget should address as far as infrastructure is concerned?
At the beginning of the current 5-Year Plan, the Government targeted a very substantial increase in infrastructure investments during the Plan. $500 billion was the Plan target with a substantial share going to the power and road sectors. The Government targeted nine per cent of GDP for infrastructure investment by the end of 5-year Plan (2012) from about 4 per cent of GDP at the beginning of the Plan period.
It is heartening to note that despite the world economic crisis and the consequent difficulties of financing major infrastructure investments, we are likely to achieve the 2012 target of 9 per cent of GDP.
It is reported that we are likely to be achieving close to 8 per cent in the current year itself and thus not miss the end of Plan target.
However, what is extremely important is to sustain the infrastructure investments.
The present Budget, therefore, should aim at doing everything right for sustaining investments into roads, power, ports, urban infrastructure, etc. on a year-on-year basis.
This will not only help economy in the long run, but will also result in addressing the more immediate issues of quicker economic recovery and employment creation.
India should clearly look at infrastructure to lead the economy rather than just supporting the economic growth.
What do you consider can be the desirable policy changes for the infrastructure sector?
There has been a lot of debate about significant policy changes to liberalise the economy across all sectors. We are lucky to see that the policies in the infrastructure have always been a little ahead of the curve as far as liberalisation is concerned.
Whether we are talking about the FDI policy or the policy of private investment into infrastructure or indeed the several policies of going more open and global in the infrastructure sectors, one can complement the Government on the good and progressive policies that we have seen.
While one can argue that there is further improvement and further liberalisation that is required in some of these policies, I think we have done quite well and can continue to evolve our policies towards more liberalisation in a gradual manner.
What is, however, required is consistency and stability of the policies, so that infrastructure investors – be they Indian or overseas – come in a bigger way, for the longer term and offer better value to the users.
Financial investors into infrastructure, such as the infrastructure funds, insurance companies and PE (private equity), can be attracted in a much more targeted and focused manner by having more consistent and stable infrastructure policies.
The Budget can do its bit towards this by ensuring that at least the fiscal concessions provided to infrastructure sectors and allocations made towards these sectors are more definitive, more consistent and indicative of a longer term stable regime.
Another important policy that the Budget can initiate the discussion on, and give an indicative incentivisation position, is the issue of sustainability of infrastructure investments. Heavy capital investments made need equally significant and assured financial allocations for maintenance of assets created.
With the entire country's focus being clearly on creation of new assets across infrastructure sectors, it is important to realise that there is no point having large allocations without corresponding allocations for maintaining the asset base created.
This is applicable even for PPP projects where the maintenance expenses have to be incurred by the private operator but he needs assured cash flows from the business (in quite a few cases the assured income comes from budgetary allocations towards annuity payments).
CII welcomes AP budget proposals
Hyderabad, Feb. 21
The State unit of the Confederation of Indian Industry has welcomed the tax-free budget with an outlay of Rs 1,13,675 crore presented by the Chief Minister, Mr K. Rosaiah. Mr Y. Harish Chandra Prasad, Chairman, CII Andhra Pradesh, was especially positive on the proposed developmental initiatives through public private partnership mode, especially the large infrastructure projects. He pointed out that the budget estimates show a fiscal deficit of Rs 12,983 crore, which will be about Rs 1,300 crore less than the revised estimates for the 2009-10 fiscal, and a revenue surplus of Rs 3,548 crore, up from Rs 2,942 crore. Reacting to the Budget, the Federation of AP Chamber of Commerce and Industry (FAPCI) cautioned that the Government expenses are increasing and there is no control to rein in on the expenditure. It said in a note that though there is a recovery in the economy in the country, this recovery is quite fragile. “But the same is not the situation in the State, particularly against the background of drought, floods, and political disturbances in the state. This is clearly reflected in the decline of exports from the state, in the marginal growth (of 5 per cent) of the tax revenues of the State. This view is further strengthened by the fact that the food production in the State has fallen by 40 lakh tonnes, a short fall of 20 per cent,” it pointed out. – Our Bureau
The State unit of the Confederation of Indian Industry has welcomed the tax-free budget with an outlay of Rs 1,13,675 crore presented by the Chief Minister, Mr K. Rosaiah. Mr Y. Harish Chandra Prasad, Chairman, CII Andhra Pradesh, was especially positive on the proposed developmental initiatives through public private partnership mode, especially the large infrastructure projects. He pointed out that the budget estimates show a fiscal deficit of Rs 12,983 crore, which will be about Rs 1,300 crore less than the revised estimates for the 2009-10 fiscal, and a revenue surplus of Rs 3,548 crore, up from Rs 2,942 crore. Reacting to the Budget, the Federation of AP Chamber of Commerce and Industry (FAPCI) cautioned that the Government expenses are increasing and there is no control to rein in on the expenditure. It said in a note that though there is a recovery in the economy in the country, this recovery is quite fragile. “But the same is not the situation in the State, particularly against the background of drought, floods, and political disturbances in the state. This is clearly reflected in the decline of exports from the state, in the marginal growth (of 5 per cent) of the tax revenues of the State. This view is further strengthened by the fact that the food production in the State has fallen by 40 lakh tonnes, a short fall of 20 per cent,” it pointed out. – Our Bureau
Budget seems to be a non-event for the market
Lokeshwarri S.K.
BL Research Bureau
Probably in deference to its experience during the July Budget session, the stock market went in to the Budget day of 2010 on an extremely subdued note.
There was a widespread belief that the Government could roll-back the stimulus given to fight the economic recession in this Budget. The Sensex was 8 per cent below the peak of 17790 recorded in January on the morning of the Budget day, reflecting this mood of caution.
The Budget can be termed neutral for the market with positives such as a clear trajectory for fiscal deficit, reduced market borrowing, boost to consumption by increasing rural spends being balanced by the negative impact of measures such as hike in minimum alternate tax and excise duty hikes.
That the Budget is a non-event and would scarcely have an impact on the trend in the market is borne by the fact that Sensex and Nifty closed barely 1 per cent higher after rising about 2.5 per cent during the session.
Most market participants had been worried about the soaring fiscal deficit and were looking for a clear cut plan from the Finance Minister to reduce this figure and get back on the path of fiscal prudence.
Market rejoiced and the Sensex came out of its comatose state to spurt higher once the Finance Minister announced the fiscal deficit of 5.5 per cent, 4.8 per cent and 4.1 per cent for 2010-11, 2011-12 and 2012-13, respectively.
The icing on the cake was the giveaways announced on the personal income-tax front. This move is viewed as positive as it can impart liquidity to the bourses. But investors need to take note of the large disinvestment programme scheduled over the ensuing months for Rs 25,000 crore. This programme can drain liquidity in secondary market and impact the performance of other IPOs.
Corporate profitability
The Budget has various implications for corporate bottom lines, both positive and negative, and stock prices would take cognizance of these. Increase in minimum alternate tax and hike in excise duty would directly reduce the bottom line of companies.
While hike in excise duty could marginally impact demand, if manufacturers decide to take concerted price increases, the outlays planned for rural development and NREGA will give a boost to consumption that is important for keeping the economy growing at a brisk pace.
Another benefit to corporate India is the reduced net government borrowing at Rs 3.45 lakh crore, 20 per cent lower than the last fiscal. Banks could now plough back higher proportion of deposits to commercial sector making credit more easily available to companies.
From a technical standpoint, the Sensex has been in a medium-term downtrend since the January peak of 17760. A pull-back rally was developing since February 8 that halted at 16669 on the Budget day.
As the index has not even retraced half of the fall since January, the medium-term trend in the index continues to be down with the possibility of the down-move continuing in the days ahead. A close above 17,000 is needed to negate the bearish medium-term view for this index.
BL Research Bureau
Probably in deference to its experience during the July Budget session, the stock market went in to the Budget day of 2010 on an extremely subdued note.
There was a widespread belief that the Government could roll-back the stimulus given to fight the economic recession in this Budget. The Sensex was 8 per cent below the peak of 17790 recorded in January on the morning of the Budget day, reflecting this mood of caution.
The Budget can be termed neutral for the market with positives such as a clear trajectory for fiscal deficit, reduced market borrowing, boost to consumption by increasing rural spends being balanced by the negative impact of measures such as hike in minimum alternate tax and excise duty hikes.
That the Budget is a non-event and would scarcely have an impact on the trend in the market is borne by the fact that Sensex and Nifty closed barely 1 per cent higher after rising about 2.5 per cent during the session.
Most market participants had been worried about the soaring fiscal deficit and were looking for a clear cut plan from the Finance Minister to reduce this figure and get back on the path of fiscal prudence.
Market rejoiced and the Sensex came out of its comatose state to spurt higher once the Finance Minister announced the fiscal deficit of 5.5 per cent, 4.8 per cent and 4.1 per cent for 2010-11, 2011-12 and 2012-13, respectively.
The icing on the cake was the giveaways announced on the personal income-tax front. This move is viewed as positive as it can impart liquidity to the bourses. But investors need to take note of the large disinvestment programme scheduled over the ensuing months for Rs 25,000 crore. This programme can drain liquidity in secondary market and impact the performance of other IPOs.
Corporate profitability
The Budget has various implications for corporate bottom lines, both positive and negative, and stock prices would take cognizance of these. Increase in minimum alternate tax and hike in excise duty would directly reduce the bottom line of companies.
While hike in excise duty could marginally impact demand, if manufacturers decide to take concerted price increases, the outlays planned for rural development and NREGA will give a boost to consumption that is important for keeping the economy growing at a brisk pace.
Another benefit to corporate India is the reduced net government borrowing at Rs 3.45 lakh crore, 20 per cent lower than the last fiscal. Banks could now plough back higher proportion of deposits to commercial sector making credit more easily available to companies.
From a technical standpoint, the Sensex has been in a medium-term downtrend since the January peak of 17760. A pull-back rally was developing since February 8 that halted at 16669 on the Budget day.
As the index has not even retraced half of the fall since January, the medium-term trend in the index continues to be down with the possibility of the down-move continuing in the days ahead. A close above 17,000 is needed to negate the bearish medium-term view for this index.
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