The Union Budget 2010 presented by our Finance Minster Pranab Mukerjee has been received positively by the stock market investors. This is evident from the sharp jump in the indices - Sensex and Nifty.
The Biggest Positive
By far the most attractive thing in the Budget 2010 for individuals is the increase in the income tax slab limits. Though the entry level slab for income tax has not been changed from Rs.1.6 lakhs, there is a considerable jump in the other slabs.
The new proposed slabs for the personal income tax are:
10% - Between Rs.1.6 lakhs and 5 lakhs
20% - Between Rs.5 lakhs and 8 lakhs
30% - Above 8 lakhs
As per the words of the Finance Minister, this proposal will bring relief to about 40% of the current tax payers.
Infrastructure Bonds are Back
Rs.20,000/- has been introduced as the additional limit for investment in Infrastructure Bonds. Infrastructure Bonds are thus making a comeback after 5 years as a savings option for tax savers. This will also reduce the tax burden for a few who are interested in traditional savings tools. This Rs.20,000/- will be over and above the current limit of Rs.1,00,000/- in various tax saving schemes.
New Pension Scheme Push
A renewed push has been given to the New Pension Scheme in this Budget. Till now the New Pension Scheme has not found much favour from the common public due to typical teething problems related to its implementation.
Our Finance Minister has proposed to give Rs.1000/- as a starting incentive to all Accounts of NPS opening in the next 3 years. This is a welcome measure, as the NPS is as of now the key Contributory Social Security Scheme in India.
Housing Interest Rate
The Finance Minister has said that the Interest Support of 1% for low cost housing loans will be extended for the next year too. This is a boon for the builders of townships and also the aam aadmi of India who could not afford costly houses. This is a direct form of supporting the recovery of the economy itself.
Support for Rural People
Agriculturists and people livings in rural India can have a breath of relief. The farm loans have been given an extension of 6 months.
Not only that, new loans will be getting a Government support of 2% reduction in interest rates. Effectively this brings down the farm interest rate to 5%. The earlier support was limited to only 1%.
The rural communities in non-arable areas get support from the continuation of the Mahatma Gandhi National Rural Employment Guarantee Scheme. The budget has allotted Rs.40,000/- crores for this scheme, which is now being implemented across the country.
Micro-Finance Support
Recognizing the major change in development brought about by micro-finance companies in India, the Finance Minister has proposed a Micro-Finance Development Fund to support Micro Finance Companies. At Rs.400 crores, the fund size is small but being with right intention, the gesture is one in the right direction.
Banks Loans
Rs.16,500 crores has been budgeted for providing the Tier I capital required for some PSU banks. This will improve the lending capacity of these banks. The Budget 2010 has also made additional provisions of capital for lending to Rural Areas.
These measures will not only stabilize banks but also provide the much needed muscle to improve the loan portfolio of PSU banks.
Additional licenses are being planned for private banks. NBFCs will also get a chance to open banks. The modalities will be discussed in detail shortly.
Overall: An Individual Friendly Budget
Based on the above concessions and support for lending and investments, we can conclude that Budget 2010 is very much friendly for the individuals of India. The salaried class may rejoice in their tax out goes coming down in a big way. The Rural Population can cheer over their cash outflows coming down and/or postponed. Banks, housing developers and those buying low cost houses can be happy with the 1% interest support
Friday, February 26, 2010
Instant view: Budget proposals
India needs to review public spending and improve its fiscal position, Finance Minister Pranab Mukherjee said today, kicking-off the presentation of his budget for the fiscal year that starts on April 1.
Key Points:
# Need to review stimulus
# Challenge to return to 9 pct growth, then double-digit
# Economy now in far better position than a year ago
# Final FY10 GDP figure maybe higher than estimate of 7.2 pct
# Fiscal deficit seen at 6.9 pct of GDP in 2009/10
# Fiscal deficit seen at 5.5 pct of GDP in 2010/11 (Reuters poll 5.6 pct)
# Fiscal deficit seen at 4.8 pct of GDP in 2011/12; 4.1 pct in 2012/13
# Total expenditure in 2010/11 11.87 trillion rupees ($256.75 billion)
# 2009/10 revised estimate for tax collection 7.47 trillion rupees ($161.58 billion)
Key Points:
# Need to review stimulus
# Challenge to return to 9 pct growth, then double-digit
# Economy now in far better position than a year ago
# Final FY10 GDP figure maybe higher than estimate of 7.2 pct
# Fiscal deficit seen at 6.9 pct of GDP in 2009/10
# Fiscal deficit seen at 5.5 pct of GDP in 2010/11 (Reuters poll 5.6 pct)
# Fiscal deficit seen at 4.8 pct of GDP in 2011/12; 4.1 pct in 2012/13
# Total expenditure in 2010/11 11.87 trillion rupees ($256.75 billion)
# 2009/10 revised estimate for tax collection 7.47 trillion rupees ($161.58 billion)
Wednesday, February 24, 2010
No fare hikes, 52 new trains announced in India's rail budget
Passengers were spared a fare hike, freight rates were lowered for some essential items and 52 new trains announced in India's rail budget for 2010-11 that promises a new model to promote private investment in expanding the world's second largest railroad network under a single management.
'We have saved Rs.2,000 crore ($40 million) because of the hard work of our employees and austerity measures. There will be no increase in passenger fares,' Railway Minister Mamata Banerjee told the Lok Sabha, the lower house of Parliament.
'Our objective is inclusive growth,' she said in her marathon 110-minute speech, adding that her main consideration was social responsibility of Indian Railways rather than mere commercial viability of various projects.
Accordingly, she also announced a cut in freight tariff for kerosene and grain, upgrade of 94 stations, 522 diagnostic centres, target of 1,000 km new lines, 10 auto ancillary hubs, several high-speed passenger rail corridors, six new drinking water plants and housing for all railway staff in 10 years.
'We have set our goals in the Vision 2020 document and we will achieve it,' the minister said, referring to the document unveiled in December that has targeted making over 30,000 km of routes into double or multiple lines against 18,000 km today.
'It is a fact that administrative and procedural delays discourage potential investors. We will need to overcome this. I am setting up a special task force for this,' said the minister, dressed in a white and green sari and her trademark rubber slippers.
'Special structure will be created for the new business model,' she said, emphasising: 'But we will not privatise railways. Indian Railways will remain with the government.'
At the same time, she also asked the private sector to refrain from what she called the 'typical negative approach' while dealing with the Indian Railways. 'I am sorry to say this -- this mindset has to change.'
She, nevertheless, said a special task force will be set up to clear proposals for investments within 100 days and that policy guidelines in this regard will be made easy, simple and investment friendly to attract funds to the sector.
Prime Minister Manmohan Singh, United Progressive Alliance (UPA) chairperson Sonia Gandhi, Leader of Opposition Sushma Swaraj and Finance Minister Pranab Mukherjee were among those in the house, presided over by Speaker Meira Kumar.
This was Banerjee's fourth budget of her career as railway minister and the second for the United Progressive Alliance (UPA) government in its second straight term after being voted back to office in May last year.
According to Banerjee, 117 out of the 122 new trains promised in her last budget will be flagged off by March 31, within a matter of seven months, which was a commendable effort.
Seeking to give safety issues due consideration, the minister said there were a few cases of unfortunate accidents in the past and said these would be prevented by adopting the highest level of technology and manpower training.
'Within five years, we will have 13,000 out of unmanned level crossings manned - 3,000 this fiscal and 1,000 in the coming fiscal,' she said, referring to the high number of accidents at such crossroads.
The budget came against the backdrop of the share of Indian Railways in the movement of goods, vis a vis truckers, falling from 24.07 percent in 2001-02 to 20.89 percent in 2008-09 and further to 19.32 percent in the first 10 months of this fiscal.
Yet, the minister said this fiscal will end with a net profit of Rs.1,328 crore. She added that the freight target for the coming fiscal will be 944 million tonnes.
Indian Railways runs the world's second largest network under a single management with a network of 64,099 route km to ferry 18.9 million passengers on 7,000 trains daily from 6,906 stations. It also runs 4,000 freight trains to carry 850 million tonnes of cargo.
The main highlights of the 2010-11 railway budget include:
-- No increase in passenger fares
-- Rs.100 reduction in freight per wagon for fertilisers and kerosene
-- Free travel for cancer patients in 3rd AC classes
-- Cost-sharing in public-private-partnership (PPP) mode in some gauge-conversion projects
-- Further extension of Kolkata Metro on priority basis; stations to be named after Bahadur Shah Zafar, Tagore family
-- Karmabhoomi trains to be introduced for migrant labour
-- New Janmabhoomi train between Ahmedabad and Udhampur
-- Special 'Bharat Teertha' train to be run around India to commemorate Rabindranath Tagore's 150th birth anniversary
-- Railway line to be extended from Bilaspur in Himachal Pradesh to Leh in Jammu and Kashmir
-- Andaman and Nicobar Islands to get railway line from Port Blair to Diglipur
-- Sikkim capital Gangtok to be connected by rail from Rangpo
-- 2011 being 150th anniversary of Rabindranath Tagore, special train to be run from West Bengal to Bangladesh
-- Gross earnings in 2009-10 estimated at Rs.88,281 crore
-- Working expenditure in 2009-10 estimated at Rs.83,440 crore
-- Expenses during 2010-11 estimated at Rs.87,100 crore
-- Thrust on expansion in 2010-11 with allocation of Rs.4,411 crore
-- Kashmir rail link to be extended to Sopore in the north of the valley
-- Net profit of Rs.1,328 crore in 2009-10
-- 10 automobile ancillary hubs to be created
-- Twenty-two million energy saving CFLs for lighting distributed already
-- Policy decision to employ one member of family whose land is requisitioned for railway projects
-- North-south, east-west dedicated freight corridors to be created
-- Construction of high-speed passenger rail corridors envisaged
-- More multi-functional hospitals to be set up
-- Educational facilities to be set up for children of 80,000 women families
-- Special facilities to be established for gangmen
-- Insurance facilities for licensed porters as part of railway's corporate social responsibility
-- Centre for railway research to be established with Indian Institutes of Technology and Defence Research and Development Organisation
-- Will involve unions in policy making
-- Integral Coach Factory Chennai to be further modernised
-- New wagon repair shop in Mumbai
-- Design, development and testing centre for railway wheels at Bangalore
-- Within five years, all unmanned level crossings to be manned
-- Construction of more underpasses, besides road overbridges
-- Greater coordination with state governments to protect railway property
-- Security of women passengers to be improved
-- Ex-servicemen to be employed in Railway Protection Force
-- Five sports academies to be set up
-- Astroturf to be provided for development of hockey
-- Employment opportunities for sports persons
-- Railways to be lead partner for Commonwealth Games
-- Special drive to increase passenger amenities
-- Upgrade of 94 stations
-- Six new drinking water bottling plants in PPP mode
-- Modern toilets at railway stations
-- More ticketing centres to help the public
-- Acquisition of cutting edge safety technology
-- 1,000 route km to be created
-- Special task force for clearing investment proposals in 100 days
-- New business model to be created
-- No privatisation of railways
-- But greater participation of private sector
-- 117 of 120 new trains for current fiscal to be flagged off
'We have saved Rs.2,000 crore ($40 million) because of the hard work of our employees and austerity measures. There will be no increase in passenger fares,' Railway Minister Mamata Banerjee told the Lok Sabha, the lower house of Parliament.
'Our objective is inclusive growth,' she said in her marathon 110-minute speech, adding that her main consideration was social responsibility of Indian Railways rather than mere commercial viability of various projects.
Accordingly, she also announced a cut in freight tariff for kerosene and grain, upgrade of 94 stations, 522 diagnostic centres, target of 1,000 km new lines, 10 auto ancillary hubs, several high-speed passenger rail corridors, six new drinking water plants and housing for all railway staff in 10 years.
'We have set our goals in the Vision 2020 document and we will achieve it,' the minister said, referring to the document unveiled in December that has targeted making over 30,000 km of routes into double or multiple lines against 18,000 km today.
'It is a fact that administrative and procedural delays discourage potential investors. We will need to overcome this. I am setting up a special task force for this,' said the minister, dressed in a white and green sari and her trademark rubber slippers.
'Special structure will be created for the new business model,' she said, emphasising: 'But we will not privatise railways. Indian Railways will remain with the government.'
At the same time, she also asked the private sector to refrain from what she called the 'typical negative approach' while dealing with the Indian Railways. 'I am sorry to say this -- this mindset has to change.'
She, nevertheless, said a special task force will be set up to clear proposals for investments within 100 days and that policy guidelines in this regard will be made easy, simple and investment friendly to attract funds to the sector.
Prime Minister Manmohan Singh, United Progressive Alliance (UPA) chairperson Sonia Gandhi, Leader of Opposition Sushma Swaraj and Finance Minister Pranab Mukherjee were among those in the house, presided over by Speaker Meira Kumar.
This was Banerjee's fourth budget of her career as railway minister and the second for the United Progressive Alliance (UPA) government in its second straight term after being voted back to office in May last year.
According to Banerjee, 117 out of the 122 new trains promised in her last budget will be flagged off by March 31, within a matter of seven months, which was a commendable effort.
Seeking to give safety issues due consideration, the minister said there were a few cases of unfortunate accidents in the past and said these would be prevented by adopting the highest level of technology and manpower training.
'Within five years, we will have 13,000 out of unmanned level crossings manned - 3,000 this fiscal and 1,000 in the coming fiscal,' she said, referring to the high number of accidents at such crossroads.
The budget came against the backdrop of the share of Indian Railways in the movement of goods, vis a vis truckers, falling from 24.07 percent in 2001-02 to 20.89 percent in 2008-09 and further to 19.32 percent in the first 10 months of this fiscal.
Yet, the minister said this fiscal will end with a net profit of Rs.1,328 crore. She added that the freight target for the coming fiscal will be 944 million tonnes.
Indian Railways runs the world's second largest network under a single management with a network of 64,099 route km to ferry 18.9 million passengers on 7,000 trains daily from 6,906 stations. It also runs 4,000 freight trains to carry 850 million tonnes of cargo.
The main highlights of the 2010-11 railway budget include:
-- No increase in passenger fares
-- Rs.100 reduction in freight per wagon for fertilisers and kerosene
-- Free travel for cancer patients in 3rd AC classes
-- Cost-sharing in public-private-partnership (PPP) mode in some gauge-conversion projects
-- Further extension of Kolkata Metro on priority basis; stations to be named after Bahadur Shah Zafar, Tagore family
-- Karmabhoomi trains to be introduced for migrant labour
-- New Janmabhoomi train between Ahmedabad and Udhampur
-- Special 'Bharat Teertha' train to be run around India to commemorate Rabindranath Tagore's 150th birth anniversary
-- Railway line to be extended from Bilaspur in Himachal Pradesh to Leh in Jammu and Kashmir
-- Andaman and Nicobar Islands to get railway line from Port Blair to Diglipur
-- Sikkim capital Gangtok to be connected by rail from Rangpo
-- 2011 being 150th anniversary of Rabindranath Tagore, special train to be run from West Bengal to Bangladesh
-- Gross earnings in 2009-10 estimated at Rs.88,281 crore
-- Working expenditure in 2009-10 estimated at Rs.83,440 crore
-- Expenses during 2010-11 estimated at Rs.87,100 crore
-- Thrust on expansion in 2010-11 with allocation of Rs.4,411 crore
-- Kashmir rail link to be extended to Sopore in the north of the valley
-- Net profit of Rs.1,328 crore in 2009-10
-- 10 automobile ancillary hubs to be created
-- Twenty-two million energy saving CFLs for lighting distributed already
-- Policy decision to employ one member of family whose land is requisitioned for railway projects
-- North-south, east-west dedicated freight corridors to be created
-- Construction of high-speed passenger rail corridors envisaged
-- More multi-functional hospitals to be set up
-- Educational facilities to be set up for children of 80,000 women families
-- Special facilities to be established for gangmen
-- Insurance facilities for licensed porters as part of railway's corporate social responsibility
-- Centre for railway research to be established with Indian Institutes of Technology and Defence Research and Development Organisation
-- Will involve unions in policy making
-- Integral Coach Factory Chennai to be further modernised
-- New wagon repair shop in Mumbai
-- Design, development and testing centre for railway wheels at Bangalore
-- Within five years, all unmanned level crossings to be manned
-- Construction of more underpasses, besides road overbridges
-- Greater coordination with state governments to protect railway property
-- Security of women passengers to be improved
-- Ex-servicemen to be employed in Railway Protection Force
-- Five sports academies to be set up
-- Astroturf to be provided for development of hockey
-- Employment opportunities for sports persons
-- Railways to be lead partner for Commonwealth Games
-- Special drive to increase passenger amenities
-- Upgrade of 94 stations
-- Six new drinking water bottling plants in PPP mode
-- Modern toilets at railway stations
-- More ticketing centres to help the public
-- Acquisition of cutting edge safety technology
-- 1,000 route km to be created
-- Special task force for clearing investment proposals in 100 days
-- New business model to be created
-- No privatisation of railways
-- But greater participation of private sector
-- 117 of 120 new trains for current fiscal to be flagged off
Sunday, February 14, 2010
FIIs bullish on India, up stake in more companies...
Source: Indian Express
Foreign institutional investors' (FIIs) faith in the Indian stock markets is on the rise despite volatile market conditions and the economy witnessing an early stage on recovery. FIIs have not only increased their stake in companies but also added more firms under their belt, said CNI Research, a leading listed research body exclusively focusing on small and mid-cap companies in India.
CNI Research has found that FIIs have increased their stake in over 322 companies in Q3 (December quarter) as against 240 companies in Q2, showing the faith of foreign investors in India and the trend of rising investments in the country.
Among 322 companies, FIIs' holding increased by up to 2% in 259 cases over the previous period, from 2% to 5% in 51 firms, from 5% to 10% in 7 companies and more than 10% in 5 firms. Of the companies where FII increased stake, 74.2% have witnessed an increased price.
Based on the analyses it was found that in 205 companies FIIs increased their holding by less than or equal to 1%. According to a study on the rise in companies stake prices at the end of the quarter, the rise was up to 10% in cases of 107 companies, while 89 of them witnessed a rise of 10% to 50% and 9 firms had a rise of over 50%.
An opportunity exists for investors to invest in the 205 companies which witnessed price rise offers. But, they have to be careful as the rise sometimes is very erratic and in some cases it is even above 50%. It is generally believed that investors should identify companies where FIIs have just started consolidating their stake. It is in this category that CNI Research has identified those companies where FIIs' holding has just started rising as the rise is not even 1%.
A close look at these firms will find that there were cases where FIIs have just started raising the stake and the price rise is below 10%, which in other terms can be called under-performers and can still offer investors an opportunity to invest. In a similar study in Q2, CNI Research had identified 28 companies having potential to deliver higher returns.
Various filters were applied and the optimum mix where FIIs buying had just started and price rise was minimal was used to identify these firms
Foreign institutional investors' (FIIs) faith in the Indian stock markets is on the rise despite volatile market conditions and the economy witnessing an early stage on recovery. FIIs have not only increased their stake in companies but also added more firms under their belt, said CNI Research, a leading listed research body exclusively focusing on small and mid-cap companies in India.
CNI Research has found that FIIs have increased their stake in over 322 companies in Q3 (December quarter) as against 240 companies in Q2, showing the faith of foreign investors in India and the trend of rising investments in the country.
Among 322 companies, FIIs' holding increased by up to 2% in 259 cases over the previous period, from 2% to 5% in 51 firms, from 5% to 10% in 7 companies and more than 10% in 5 firms. Of the companies where FII increased stake, 74.2% have witnessed an increased price.
Based on the analyses it was found that in 205 companies FIIs increased their holding by less than or equal to 1%. According to a study on the rise in companies stake prices at the end of the quarter, the rise was up to 10% in cases of 107 companies, while 89 of them witnessed a rise of 10% to 50% and 9 firms had a rise of over 50%.
An opportunity exists for investors to invest in the 205 companies which witnessed price rise offers. But, they have to be careful as the rise sometimes is very erratic and in some cases it is even above 50%. It is generally believed that investors should identify companies where FIIs have just started consolidating their stake. It is in this category that CNI Research has identified those companies where FIIs' holding has just started rising as the rise is not even 1%.
A close look at these firms will find that there were cases where FIIs have just started raising the stake and the price rise is below 10%, which in other terms can be called under-performers and can still offer investors an opportunity to invest. In a similar study in Q2, CNI Research had identified 28 companies having potential to deliver higher returns.
Various filters were applied and the optimum mix where FIIs buying had just started and price rise was minimal was used to identify these firms
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