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The Finance Minister Arun Jaitley, will present the Union Budget 2016 amid a weak global setup and an anaemic domestic recovery. The consumption stimulus onaccount of One Rank One Pay (OROP) and 7th Pay Commission, and investment stimulus (with private sector capex is yet to recover) are expected to result in higher spends. Thus, the FM will have to be resourceful enough to meet the FD targets. Kotak Securities says it is looking for an 'Achievable' and 'Sustainable' budget; one of the pre-requisites for further monetary policy easing by RBI. Here are 10 points to note: (PTI)
1. Budget 2016 expectations: The FM's priority in the 2016-17 budget will be higher growth, with fiscal rectitude, we believe. With the private sector capex yet to pick up, he will budget for higher plan capital expenditure (investments), in addition to the higher spends on OROP and 7th Pay Commission, which need to be factored in. These will be proposed to be financed by higher revenues from divestment/privatisation, higher indirect tax rates, telecom auctions and better tax compliance, apart from a cut in non-plan expenditure (subsidies) via DBT. (PTI) -
2. Budget 2016 expectations: A lower fiscal deficit will leave more money available for the private sector, help in easing inflation, and moderate interest rates further. We expect targets under the FRBM Act to be largely maintained. We expect the FM to target a fiscal deficit of 3.7% for FY17 and budget for a gradual reduction in fiscal deficit per annum to 2.5% by FY19. (PTI)
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The Narendra Modi government is likely to approve higher increase in basic pay than the nearly 15 per cent recommended by the 7th Pay Commission for over 1 crore government employees and pensioners. The pay panel had in November last year recommended 14.27 per cent hike in basic pay at junior levels, the lowest in 70 years. The previous 6th Pay Commission had recommended a 20 per cent hike which the government doubled while implementing it in 2008. After considering the increase proposed in allowances, the hike in remunerations comes to 23.55 per cent. 5 facts to know ahead of the Cabinet meet today:
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4. Budget 2016 expectations: The budget will aim to provide an investment – led supply aid to growth (with private sector participation via Make in India campaign) as well as a consumption – led demand pull growth via 7th Pay Commission, OROP and DBT of subsidies. (PTI)
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The Budget document states that "the implementation of the Seventh Pay Commission due from January 1, 2016 is to be implemented during 2016-17 fiscal as also the revised One Rank One Pension (OROP)scheme for Defence services." (PTI)
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6. Budget 2016 expectations: FM Arun Jaitley will have to restrict non plan expenditure to meet his FD targets. While the food subsidy burden will be taken up, we believe the FM will budget for lower fuel subsidy bill on the back of lower crude prices. He will also better target subsidies through the JAM trinity. The government has already announced on January 1, the launch of DBT for kerosene subsidy in a bid to cut down the diversion and black marketing of the fuel. The kerosene subsidy in FY15 was pegged at about Rs.248bn. As per reports, Direct Benefit Transfer (DBT) for LPG had resulted in savings of about Rs.140bn in FY15. We expect DBT to be gradually used for more subsidies. Implementation of DBT for fertilizer and crop subsidy could result in substantial savings. (PTI)
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7. Budget 2016 expectations: To provide higher employment opportunities and to make the workforce employable, we expect measures to promote the 'Make in India' and 'Skill India' initiative. We also expect higher allocations towards agriculture and rural sector to support rural growth, after two continuous drought years in the country. (PTI)
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8. Budget 2016 expectations: We expect the divestment target to be increased to Rs 500bn in FY17 v/s the FY16RE of Rs.200bn. Tax revenue targets (net) may be set at Rs.10.2trn, an 8% growth over FY16RE. Customs duty may be tweaked on several items to further the 'Make in India' cause. We expect implementation of GAAR to be postponed to FY18. We also expect tax benefits for the export-oriented sectors, in view of the consistently falling exports and some measures to restrict dumping. (PTI)
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Zee Learn share price closed 8.39 per cent up at Rs 32.30 after the firm reported 102.52 per cent rise in net profit figures at Rs 8.02 crore against Rs 3.96 crore in the corresponding quarter a year ago. (Photo: PTI)
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10. Budget 2016 expectations: We believe that, the budget may have the following implications for the sectors: BUDGET IMPACT POSITIVE: Sectors – Auto, Banking/NBFCs, Capital Goods, Cement, Construction, Metals & Mining, Oil & Gas, Paints, Power, Shipping & Logistics. BUDGET IMPACT NEUTRAL: Sectors – Agro Chemicals, Aviation, FMCG, Information Technology, Media, Pharmaceuticals, Real Estate. (PTI)
