Most brokerage houses believe the fiscal deficit target of 5.1% for FY13 is too optimistic. For some, it is a "pragmatic" Budget given the political compulsions of Congress-led ruling alliance, while others believe that it is a missed opportunity. The following is a brief summary of brokerage houses' views on the Union Budget Fy13:
Anand Rathi Financial Services:
Neither here nor there
- Budget FY13 is devoid of any meaningful reforms that could have addressed fiscal, inflation and growth problems. The Budget targets for FY13 seem too optimistic.
- We expect subsidy payments, fiscal deficit and market borrowing to be higher and corporate tax lower than Budgeted.
- Fiscal deficit target of 5.1% of GDP in FY13 unattainable due to overestimating revenue and underestimating spending.
- Hike in general excise duty to weigh negative on the auto and consumer sector.
Prabhudas Lilladher
- Fiscal deficit target a tall order in the wake of unrealistic assumptions on the subsidy front.We believe the realistic deficit number should be closer to 5.5%.
- Tax collections expected to be strong.
- With strong global liquidity flooding the equity markets in general and emerging markets (including India) in particular, we expect the target of Rs 30,000 crore to be achieved this year.
- All hopes on roll-out of liberalization measures in foreign capital participation in sectors like multi-brand retail, insurance, pensions and aviation have been deferred.
PINC Research
Politically Correct
- Contrary to the expectation, Union Budget 2012 was less severe on the industry despite its focus on revenue mobilisation.
- Across the board hike in service tax and excise duty rates is inflationary and is likely to delay the interest rates cut.
- Amendment in The Income Tax Act to widen the definition of income deemed to accrue from India with retrospective effect is a big setback to foreign investments in the Indian economy
- Increase in customs duty on Gold is a right step to channelise domestic savings in productive assets
Emkay Global
Promises greater than expectations; conviction lower than realism
- Higher than expected expenditure Budget, intent for fiscal consolidation should have reflected in meaningful cuts in non-plan expenditure.
- Understatement of fuel subsidy. In Rs 43,600 crore provided as petroleum subsidy for FY13BE, we believe about Rs 40,000 crore is spill over of FY12. In addition, the Budget is silent on fuel price hikes.
- Optimistic assumption for gross tax collections, non-tax revenue and disinvestment targets.
- Divestment targets set at Rs 30,000 crore could be at risk given that in FY12RE the mobilization was far less than initial Rs 40,000 crore target
Angel Broking
A pragmatic Budget
- Increase in excise and service tax rates as well as the increase in the ambit of service tax was on expected lines and makes the Budget's revenue estimates more believable.
- If the government delivers on its intent to increase retail oil prices, the fiscal deficit is still likely to be 40-50 basis points lower than that in FY12
- Rs 40,000 cr from telecom spectrum auction and Rs 30,000 crore from divestment are not over-ambitious targets.
- Oil and gas was amongst the key sectors that were negatively impacted. Increase of cess on crude oil negative for Cairn and ONGC.
