We anticipate the short term rates to come down in April as liquidity would remain comfortable
"Govt announced Fiscal deficit of Rs 5.25 trn (5.9% of GDP) for FY12 as against budgeted figure of 4.6%.
For FY13, the govt has pegged the Fiscal deficit at Rs 5.15 trn (5.1%) of GDP.
The government borrowed Rs 5.1 trn approx. (gross borrowing) in FY12 and has pegged FY13 gross borrowing at 570000 cr.
This construes to a borrowing of 110% of fiscal deficit in FY13 as compared to 90%-95% generally.
Initial workings show an additional borrowing in dated securities of Rs 55000 cr for FY 13, out of which, Rs 25000 cr can be attributed to additional redemptions.
Remaining Rs 30000 cr can be attributed to repayment of treasury bills, lesser reliance on small savings and lower disinvestment proceeds target.
The high level of gross borrowings would start having a drag on longer end of the curve.
Also, with majority of redemptions in FY13 slated in 1st half, the government would have to front-load the borrowing calendar.
This would mean a borrowing of Rs 15k-16k every week. We expect yield curve to come under pressure and steepen as we head into next year.
We expect 10yr G-Sec to trade 8.40% to 8.50% in near future and then inch upto 8.60-8.75% in next quarter.
The shorter end of the curve would remain supported as liquidity in the system would remain comfortable and most of the borrowing would come in the longer end.
We also anticipate the short term rates to come down in April as liquidity would remain comfortable.
-- Ritesh Jain, Head of Investments, Canara Robeco Mutual Fund to today's Union Budget 2012
Use of mobile technology to manage fertiliser movement and subsity is a novel step
A status quo budget.
Use of mobile technology to manage fertiliser movement and subsidy is a novel step and will act as catalyst for other M-governance projects.
Service tax base widened and little relief for common man.
-- Mahavir Chand, Managing Director, GoDB Tech Pvt Ltd
Union Budget 2012-13 positive for the broking industry
The broking industry will get a big boost with the proposed Rajiv Gandhi Equity Scheme helping to revive the retail investor interest in the equity markets.
More retail investors coming into the market to avail the tax benefit of Rs.50000 for investment into stocks augurs well for the long term health of the broking industry.
This coupled with the reduction in STT by 20% on investment transactions is very positive for capital market intermediaries.
-- Sandeep Nayak CEO, Centrum Broking
Union Budget 2012-13 lacks on reform intent
Overall, the budget lacks on reforms intent. Finance Minister has tweaked the rates and his political compulsions probably held him back from looking at reforms initiatives.
1. ECB for the low-cost housing and interest subventions for the affordable housing is a good initiative.
2. Direct taxes provide some relief but not significant push home buying higher.
3. Inclusion of Affordable housing under other industries for reduction of withholding tax for interest payment is a good policy move.
4. Increase in Excise Duty and Service tax will increase the burden on home buyers. I wish the Finance minister had provided relief to housing industry and home buyers
The middle class will spend more than save on account of this budget."
-- K S Sudarshan, Chief Operating Officer, Ozonegroup
Union Budget 2012-13: No carrot to offer a common man
The budget had no carrot to give a common man.
The Income Tax exemption level upto Rs 2 lakh for the general category of individual taxpayers was anticipated he said.
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As the Service tax being increased by 2%, it only adds to the pressure of inflation, which again directly impacts common man's purchasing power only.
He said that this was a good opportunity for the Finance Minister to take some strong steps on DTC and GST and also some expectations were there like MAT to be abolished and on wealth tax but that did not happen on this budget, he concluded stating that we can wait for the next electionary budget to give some innovative measures.
Overall in his view Budget 2012 did not give any fruit for common man.
-- Mr G Sekar, Founder & Chairman, Guru Kripa's Institue of Management
Union Budget 2012 is a balanced budget in difficult times
The Union Budget 2012 is a balanced budget in difficult times.
The proposal to allow QFIIs to access Indian Corporate bond market and tax incentive for subscription to capital issues by retail investors will attract funds in capital market from a larger number of the investors.
Inflation is something that would still bother the common man as supply side constraints still need to be addressed and money supply set to increase in the hands of the consumer by increased spending of Government coupled with income tax benefits.
-- Sunil Goyal,MD, Ladderup Corporate Advisory Pvt Ltd.
The opportunity for FIIs to invest in domestic corporate debt is positive
There are no major negatives with the budget.
It is broadly on expected lines, and there are major surprises either way.
The numbers for the fiscal deficit are more realistic than they were for the last year, and with the rise in excise duty and service tax rates, should not be too difficult to get to.
The government has to focus on keepings its expenditure close to the budgeted number, with about 9 per cent increase built in the non- plan expenditure figure.
The breaks given to the infrastructure sector and companies are welcome.
The opportunity for FIIs to invest in domestic corporate debt is a positive, and may lead to a deepening of the bond market.
-- Rajat Jain, CIO, Principal Mutual Fund
Sops promised to the infrastructure & power sector should be able to lift up the sentiments
A first look at the Budget 2013 clearly indicates that inspite of not introducing any big reforms, the government has tried to address the fiscal slippage by increasing taxes and keeping a check on the expenditure.
The sops promised to the infrastructure and power sector should be able to lift up the sentiments in the slowing investment environment.
As far as the aam janta is concerned, we are of the view that although some modifications have been made in the tax exemptions, we believe that by raising the indirect tax brackets, the net benefit to the investor is negligible.
We are of the view that since not much credible measures were introduced interms of reduction of subsidies and other reforms, the Reserve Bank will continue its hawkish stance for some more time before cutting the rates."
-- Renu Pothen, Research Head, Fundsupermart.com India
Silence on import duty on power equipment is negative
The budget speech of the Finance Minister is silent on import duty on power equipment and this is a great disappointment for the electrical equipment industry even though we has to go throught the fineprint.
However the power sector is given a push by way of extension of 80IA sunset clause, customs duty waiver for coal etc.
-- Narayan Sethuraman, MD, WS Industries
