2010 Budget Analysis 26Feb10

8/6/2019 2010 Budget Analysis 26Feb10

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1Established 1803

Jay Shankar

(91 22) 6766 3442

[email protected]


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Union Budget Analysis 201011 2

Minimalist government aiming for inclusive growth

What he means

Governments need to don the role of facilitator instead of actively participating in

the growth process

Focus on growth a necessary but not sufficient condition for economicdevelopment. It must be complemented by the notion of economic equity to

make the growth process inclusive

What he means

Governments need to don the role of facilitator instead of actively participating in

the growth process

Focus on growth a necessary but not sufficient condition for economicdevelopment. It must be complemented by the notion of economic equity to

make the growth process inclusive

What the FM said

An enabling government does not try to deliver directly to the citizens everything that

they need. Instead it creates an enabling ethos so that individual enterprise and

creativity can flourish. Government concentrates on supporting and delivering

services to the disadvantaged sections of society.


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Broad themes

Path to fiscal prudence clearly charted out in Budget 2010; fine balance achieved between the twinobjectives ofpromoting growth at this nascent stage of Indias economic recovery and fiscal consolidation

Governments social obligations fulfilled with several new programmes introduced for socially weakersections. Budget also in tune with modern-day realities such as climate change and the need for clean energy

Personal tax slabs increased, leaving more money in the hands of consumers; private consumption demand,which had suffered a setback during the slowdown, likely to pick up

Investment boosters include simplification of FDI regime, set-up of a Financial Stability and DevelopmentCouncil, extension of banking licences to NBFCs and private players, recapitalising PSU and Regional Banks

Continued focus on agriculture (incentivising increased output, credit support and food processing sector),infrastructure and energy


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Key announcements

Reduction in net market borrowing from Rs 3,980bn in FY10 to Rs 3,450bn in FY11 allays fears ofgovernment borrowing crowding out private investment and will also prevent a hardening of interest rates

Divestment target for FY10 increased from Rs 11.2bn to Rs 259.6bn, and further to Rs 400bn for FY11

No petroleum price deregulation as envisaged by the Kirit Parikh report, but FM points to policy decisions onthis front in due course

Tax slab increased a key driver for consumption growthSlabs: Up to Rs 160,000: NIL 160,000 to 500,000: 10% 500,000 to 800,000: 20% > 800,000: 30%

Hike in MAT from 15% to 18% but marginal impact, as partially counterbalanced by a cut in surcharge oncorporates to 7.5% from 10%

Excise duty rolled back partially to 10% from 8%. Service tax retained at 10%; new services brought underthe tax net. FM proposes to roll out GST and DTC before April 2011


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Fiscal deficit ratio to narrow

(1.9)(3.2)(3.0)as % of GDP

133195175Primary Deficit (5.5)(6.7)(6.8)as % of GDP

315264278On Revenue Account

381414401Fiscal Deficit

(4.0)(5.3)(4.8)as % of GDP

277329283Revenue Deficit

150115124Capital Expenditure

959906897Revenue Expenditure1,1091,0221,021Total Expenditure

585147On Capital Account

373315325Plan Expenditure

936477On Capital Account

249220226Interest Payments

644642619On Revenue Account of which,

736706696Non-plan Expenditure

1,1091,0221,021Total Receipts

381414401Borrowings and other Liabilities*

40261Other Receipts

544Recoveries of Loans

427444406Capital Receipts 148112140Non-tax Revenue

534465474Tax Revenue (net to Centre)

682577614Revenue Receipts

2010-2011Budget Estimates

2009-2010Revised Estimates


(Rs bn)

Budget at a glance

The 3G auction money will nowcome in FY11

Governments net market borrowingprojected at Rs 345bn

15% increase in Plan expenditure, butincrease in non-Plan expenditure only6% over BE of the previous year

Revenue and fiscal deficit ratio todecrease due to improved revenuesand higher GDP in the denominator


6/33Union Budget Analysis 201011 6

Revenue receipt estimates overly optimistic

682.2577.3614.5Total Revenue Receipts

148.1112.2140.3Total Non-Tax Revenue 0.91.10.8Receipts of Union Territories

Fund/NDRF

74.636.868.5Other Non-Tax Revenue

2.13.12.1External Grants

51.352.049.8Dividend and Profits

19.319.219.2Interest Receipts

Non-Tax Revenue534.1465.1474.2Centres Net Tax Revenue

209.0164.8164.4Less: States Share

National Calamity Contingency

3.63.22.5Less: NCCD transferred to the

0.00.00.0Territories

1.71.61.6Taxes of the Union

68.058.065.0Service Tax

132.0102.0106.5Union Excise Duties

115.084.598.0Customs

8.16.90.4Other Taxes and Duties*

120.6125.0112.9Income Tax

301.3255.1256.7Corporation Tax 746.7633.1641.1Gross Tax Revenue

Tax Revenue

Revenue Receipts




(Rs bn)

Receipts

Receipt estimates overly aggressive:

36% increase in customs duty overFY10 RE (~15% of gross tax revenue)

18% increase in corporate tax (~40%share)

30% increase in excise duties (~18%share)

Still, the FMs confidence in thesenumbers has been cheered by themarkets, especially the one oncorporate tax!

Divestment target of Rs 400bn reflects

aggressiveness of the govt divestmentprogramme

Success hinges on continued buoyancyin market sentiment and conservativepricing of public offers especiallyrelevant in the backdrop of a lukewarm

response to NTPC



Infra thrust in FY11 Central Plan

524.5425.6447.9Grand Total

1.51.41.4General Services

127.6101.4103.9Social Services***

7.65.46.3General Economic Services

13.79.911.2Science Technology &Environment

18.516.116.7Communications

102.088.994.3Transport **

39.030.735.7Industry and Minerals

146.6109.7115.6Energy

0.50.40.4Irrigation and Flood Control

55.251.651.8Rural Development*

12.310.110.6Agriculture and Allied Activities




(Rs bn)

Central plan outlay by sectors

Energy, transport and social services,accounting for 28%, 19% and 24%respectively of the total central planoutlay, have seen a sharp increase of34%, 15% and 26% respectively



Fiscal consolidation and economic growth

Fiscal deficit in India at unsustainable levels

Consolidated deficit for the Centre and states is above 11%,

levels seen around the early 1990 crisis years

Roadmap for fiscal consolidation envisages targets of 5.5%,4.8% and 4.1% for FY11, FY12 and FY13 respectively

Fiscal targets and a reined-in net market borrowing number

cheered by the market

Q3FY10 GDP slowdown to 6% YoY a one-off and does not

change the long-term positive outlook

Impact of the worst drought since 1972 on agriculture

largely came through in late 2009 agri output (17% of

GDP) fell by 2.8%

But winter rains and rabi crops have been better andagriculture will augment GDP again in coming quarters

Main drivers of Indias upswing, manufacturing and

services, stayed strong in Q3 and will continue to perform

impressively in 2010 even as policy stimuli are withdrawn

Government expects GDP growth to average 7-7.5% in

FY10, 8.25-8.75% in FY11 and 9%+ in FY12, followed by a

double-digit print fairly attainable targets in our view

02468

1012

FY06

FY07

FY08

FY09

FY10(RE)

FY11(BE)

FY12(BE)

FY13(BE)

Central Govt. Fiscal Deficit

General Govt. (consolidated) Fiscal Deficit(% of GDP)

(5)

0

5

10

15

Jun-06

S

ep-06

D

ec-06

M

ar-07

Jun-07

S

ep-07

D

ec-07

M

ar-08

Jun-08

S

ep-08

D

ec-08

M

ar-09

Jun-09

S

ep-09

D

ec-09

GDP Agriculture & allied

Industry Services

Impact of monsoon on economic growth is transitory

Fiscal deficit unsustainable

(% YoY)



Sector-wise impact



Sector snapshot

ImpactSector Winners/LosersKey measures

Bajaj Auto, Hero

Honda, Maruti, M&M

Excise duties increased by 2%; favourable change in personal

income tax slabs; higher allocation for rural developmentPOSITIVEAutomobiles

Jet Airways, SpiceJet,Kingfisher

Levy of service tax; increase in customs dutyNEGATIVEAviation

BOB, PNB, OBC,Dena Bank

Lower government borrowing in FY11; progressive fiscal deficittargets; capital infusion in PSU banks

POSITIVEBFSI

NoneIncrease in excise duty by 2%; introduction of coal cess; higherallocation to infrastructure and road projects

NEUTRALCement

Nestle, Marico, ITCExcise duty hiked by 2%; favourable change in personal income taxslabs; increase in excise for cigarettes and tobacco

POSITIVEFMCG

All construction cos,

Developers

46% of total plan outlay (Rs 1,735bn) allocated for infrastructure; but

MAT rate a negative for developers

POSITIVEInfrastructure

All stocksIncrease in MAT rate from 15% to 18%NEGATIVEInformationTechnology

Concor, GDL, ArshiyaSops for cold chain and warehouse developmentMARGINALLY

POSITIVELogistics



Sector snapshot

ImpactSector Winners/LosersKey measures

NoneConcessional customs duty of 5% for initial set up of Digital Head

End by MSOs; Select online news agencies exempt from service taxNEUTRALMedia

ONGC, Oil India, RILand other refineries

Increase in customs and excise duties on crude oil and petroleumproducts; retail price hike in petrol and diesel

NEGATIVEOil and Gas

KEC, Jyoti, EMCO,Crompton, Suzlon

Increased budgetary allocation; thrust on renewable energy;proposed set up of a coal regulator

POSITIVEPower

DLF, Unitech, HDILAnant Raj, Phoenix

Service tax on under construction property and rental negative forsector.

NEGATIVEReal Estate

NoneHigher disposable income a key positive; but higher excise and

customs duty on gold marginally negative for discretionary retailers

NEUTRALRetail

Bharti, Idea, RcomIncrease in MAT rate and diesel chargesNEGATIVETelecom

Ranbaxy, Dr Reddys,Glenmark, Biocon

Higher weighted average R&D deduction (in-house and specifiedinstitutions)

NEUTRALPharmaceuticals



Automobiles

Winners | Bajaj Auto, Hero Honda, Maruti, M&M

Budget Provision Old ImpactNew

Personal tax slabs broadened

Will lead to higher disposable income; positive for two-

wheelers and passenger vehicles

Higher allocation for rural development

and NREGA schemes

To boost rural disposable income; positive for two-

wheelers and Mahindra & Mahindra-

Increase in excise dutyIn line with expectations; most companies announce a

pass-through of prices hence the impact is neutral8% 10%

Restoring basic duty of 7.5% and levy of

central excise duty of Re 1/litre on diesel

and petrol

Negative for commercial vehicles as profitability of

fleet operators could be affected

POSITIVE

Excise duty hike of 2% in line with expectations and already factored into stock prices

New direct tax proposals to increase disposable incomes; augurs well for two-wheelers and passenger vehicles Proposal for higher fuel prices the only dampener; will affect the CV segment



Aviation

Losers | Jet Airways, SpiceJet and Kingfisher


Increase in customs duty

Negative for all players; will increase operating cost by

1.5-2%. Fuel is 30-40% of operating cost 5%

Service tax on airport services

Neutral for all players; airport charges (15-20% of

operating cost) to rise by 1.5-2%. But service tax paid

can be offset against passenger collections

10%

Levy of service tax on passenger fares

Negative for all players; will increase passenger travel

cost and thus negatively impact passenger traffic and

load factors for airline companies

10%

NEGATIVE

Budget to have a significantly negative impact on the already struggling airline industry

Levy of service tax and increase in customs duty to inflate operating cost of airlines



BFSI

Winners | BOB, PNB, OBC, Dena Bank


Targets set for paring the fiscal deficit

Positive in the longer term as a lower deficit will ease

pressure on loan demand

6.7% in FY10

(revised)

5.5% in FY11

4.8% in FY124.1% in FY13

RBI to mull issue of new branch licences

to private players and NBFCsLicences to be issued post fulfillment of certain

conditions as laid down by RBI.

Reduction in net market borrowing

Alleviates concerns of crowding out of private

investment. Long-term yields to remain at 7.7-8% in the

near term

Rs 3,980bn

in FY10

Rs 3,450bn

in FY11

Thrust on financial inclusionPositive; will support banking services in remote areas

and regions currently out of the banking net

POSITIVE

Increase in allocated amount for capital

infusion in state-owned banks in order tomaintain Tier I capital of at least 8%

Positive for all PSU banks but impact would be greater

for banks like Dena Bank, Vijaya Bank, Bank ofMaharashtra and IDBI

NA Rs 165bn



BFSI

Winners | BOB, PNB, OBC, Dena Bank


6-month extension for repayment of loans

under Agri-debt relief scheme

Positive for all PSU banks, specially for BOB, PNB and

OBC as they could see provision write-backs in Q4.

But more loan repayment delays likely from farmers

31 Dec 2009 30 Jun 2010

Extension of 1% interest subvention by one

year for home loans up to Rs 1mn andhome cost of up to Rs 2mn

Marginally positive for housing finance companies,

especially Dewan Housing31 Mar 2010 31 Mar 2011

Changes in legislation relating to the

financial sector

Positive; will lead to streamlining of regulations for the

sectorNA

Set up of a

Legislative

Reforms

Commission

POSITIVE

Government target of maintaining gross fiscal deficit at 5.5% and reducing it to 4.1% by FY13 a key positive

We expect benchmark yields to remain in the 7.7-8% range in the near term Allocation of Rs 165bn towards capital infusion in PSU banks in line with expectations



Cement


Introduction of cess on coalMarginally negative as cost of cement production is

likely to increase by Rs 0.4-0.5/bagNil Rs 50/tonne

Increase in infrastructure spending and

allocation to road sector

Positive as it will lead to increased cement

consumption; we already expect a 10%+ increase in

cement demand for the next two years

Increase in excise duty

Neutral as the cost increase will be passed on (barring

south-based players); 2% hike implies Rs 3-4/bag hike

in cement prices

8% 10%

Reduction in excise duty on LED lights Orient Paper to benefit marginally8% 4%

NEUTRAL

Excise duty hike will be passed on; however south-based players may be unable to shift the increased cost burden (impact of Rs 60-80/tonneon EBITDA)

Higher infrastructure spending and extension of concession for low-cost housing likely to bolster cement demand

Diesel price hike to result in higher freight cost; coal cost to marginally increase on account of cess



FMCG

Winners | Nestle, Marico


Change in personal income tax slabs and

thrust on rural schemes

Positive for consumer companies as it will put more

money in the hands of consumers

Increase in MAT rateNegative for MAT-paying companies like Dabur and

GCPL with earnings impact of 2-3%15% 18%

Increase in peak excise dutyIn line with expectations; most companies likely to

pass-through the cost increase hence neutral impact8% 10%

Increase in excise for cigarettes and

tobacco products

Negative for ITC as slab-wise increase in various

categories of cigarettes will lead to overall 15% hike in

excise; we expect earnings impact of 4% for FY11

POSITIVE

Peak excise duty hike of 2% in line with expectations and already factored into stock prices

New direct tax proposals and increased rural spending to boost disposable incomes; augurs well for FMCG sector Increase in excise for cigarettes and tobacco products the only dampener; will affect ITC

Losers | ITC



Infrastructure

Winners | All construction companies Losers | Developers due to MAT increase


Railways allocation hiked by ~6% Positive for all infrastructure companiesRs 158bn Rs 167.5bn

Power allocation hiked ~130% (excl

RGGVY)Positive for all infrastructure companiesRs 22.3bn Rs 51.3bn

Roads allocation hiked by 13%+ Positive for all infrastructure companiesRs 175.2bn Rs 198.9bn

Bharat Nirman allocation hiked ~17.4% Positive for all infrastructure companiesRs 409bn Rs 480bn

POSITIVE

Urban development allocation up ~80% Positive for all infrastructure companiesRs 30.6bn Rs 54bn



Infrastructure

Winners | All construction companies Losers | Developers due to MAT increase


Deduction u/s 80C specifically for

investments in infrastructure bonds, in

addition to the existing Rs 100,000 limit

Positive for all infrastructure companies Rs 20,000

Increase in MAT rate Negative for all developer stocks IRB, GVK, GMR15% 18%

Hike in IIFCL disbursement targets Positive for all infrastructure companiesRs 90bn by

March 2010

Rs 200bn by

March 2011

POSITIVE

Key positives: a) Budget allocates Rs 1,735bn (46% of total plan outlay) for infrastructure; b) Take-out financing scheme expected to initially

provide finance of ~Rs 250bn in next three years; c) Increased spending under various infrastructure schemes Key negative: Increase in MAT from 15% to 18%

Higher defence sector allocation (incl

Rs 600bn for capital expenditure)Positive for L&TRs 1,417bn Rs 1,473bn

Project import status to Monorail projects

for urban transport at a concessional basic

duty of 5% granted

Positive



Information Technology

Losers | All companies


Changes to Section 10AA (SEZ)Clears confusion over tax benefits available from SEZ

units on retrospective basis

Tax benefits

from FY10

Tax benefits

available from

FY05

Increase in MAT rateEarnings neutral due to MAT credit entitlement, but

negative impact on cash flows15% 18%

NEGATIVE

Higher MAT rate to adversely affect operating cash flows of all companies; however, Infosys to see least impact among tier-1 players

No announcement on extension of tax benefits for STPI units, in line with our expectations



Logistics

Winners | Concor, Arshiya Losers | GDL


ECB allowed for cold chain players Positive for Concor, GDL, Arshiya

Infrastructural benefits for cold chain

players lower customs duty, service taxMarginally positive for Concor, GDL, Arshiya

Customs duty:

~10%; Service

tax: 10%

Customs duty:5%; Service

tax: NIL

MAT rate increased

Surcharge reducedNegative for Gateway Distriparks (GDL), Arshiya

15%

10%

18%

7.5%

Implementation of GST by April 2011 All logistics players- -

MARGINALLY POSITIVE

Increase in MAT rate negative for GDL

Benefits for cold storage and warehousing business marginally positive for players like Concor, GDL and Arshiya


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Media


News agencies which meet certain criteria

and who provide news feed online to be

exempt from service tax

No impact

Project import status to initial set up of

Digital Head End by MSOs with

concessional customs duty of 5% and full

exemption from special additional duty

Positive for multi-service operators

NEUTRAL

No impact on broadcasters, radio, outdoor media and print media companies


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Oil and Gas

Losers | Refineries primarily Reliance Industries


Hike in excise duty by Re 1/ltr on petrol

and diesel

Negative for refineries (RIL, Essar Oil, CPCL, MRPL).

Under-recoveries to increase by Rs 106bn in FY11 and

Rs 114bn in FY12

Rs 13.35/ltr,

Rs 3.6/ltr

Rs 14.35/ltr,

Rs 4.6/ltr

Increase in MAT

Negative for RIL (EPS to decline by Rs 2 in FY11 and Rs

3.8 in FY12) and Cairn India (EPS impact of Re 1 in

FY11 and Rs 1.4 in FY12)

15% 18%

5% hike in customs duty on crude oil,petrol & diesel, and other refined products(ex-naphtha, LPG, LNG, CNG, pet coke)

Negative for refineries (RIL, Essar Oil, CPCL, MRPL).

Under-recoveries would increase by Rs 132bn in FY11

and Rs 141bn in FY12. Positive for ONGC and Oil

0%, 2.5%,

5%

5%, 7.5%,

10%

Post Budget: Increase in petrol and diesel

retail prices

Will fully compensate for OMC under-recoveries;

neutral for OMCs, ONGC, Oil India and GAIL

Rs 48.5/ltr,

Rs 36.4/ltr

Rs 51.2/ltr,

Rs 39/ltr

NEGATIVE

Increase in under-recoveries due to duty hikes fully compensated for by post-budget hike in retail prices for petrol and diesel

Duty hike negative for refineries but positive for ONGC and Oil India

MAT rate increase to have a negative impact on RIL and Cairn India


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Pharmaceuticals


Hike in excise duty on APIs

Negative for formulation companies; API

manufacturers may pass on the rise to formulation

manufacturers

8% 10%

Excise duty on formulations unchanged Neutral4% 4%

NEUTRAL

Hike in MAT rateNegative for most pharma companies Sun, Lupin,

Cadila, Glenmark, Biocon, Dishman, Jubilant15% 18%

Higher weighted average R&D deduction

(in-house)

Positive for Ranbaxy, Dr Reddys, Glenmark, Biocon,

Cadila, Lupin, SPARC, Piramal Life150% 200%

Higher weighted average R&D deduction(specified institutions)

Positive for Ranbaxy, Dr Reddys, Glenmark, Biocon,

Cadila, Lupin, SPARC, Piramal Life125% 175%


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Pharmaceuticals


NEUTRAL

Partial rollback of excise duty cut on APIs and rise in MAT rate are negatives

However, this is largely offset by higher weighted tax deductions for R&D and lower surcharge rates

Increased allocation to healthcarePositive for the healthcare sector; no major

beneficiaries from our coverage universeRs 195.8bn Rs 223bn

Peak customs duty unchanged Neutral10% 10%

Reduction in corporate tax surcharge Positive; will partially offset the higher MAT rate10% 7.5%


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Power

Winners | Suzlon, KEC, Jyoti, Crompton


Proposed set up of a coal regulator

Positive; this has been a long pending demand due to

delays in coal block allocation and lack of transparency

in the allocation process

No regulatorSet up of

regulator

Plan outlay for Ministry of New and

Renewable Energy increased by 61%

Positive for equipment manufacturers like Suzlon

Energy as it will expand the marketRs 6.2bn Rs 10bn

Planned allocation for Power sector

increased (excluding RGGVY)

Positive for KEC, Jyoti Structures, EMCO, Crompton

GreavesRs 22.3bn Rs 51.3bn

Clean energy cess on coal (domestic and

imported)Negative for Tata Power, GVK, Lanco, Adani Power Rs 50/tn

POSITIVE

Competitive bidding for coal mines Negative for utilities as cost of coal will increase


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Power

Winners | Suzlon, KEC, Jyoti, Crompton


Increase in MAT rate Negative for private utilities15% 18%

Exemption of excise duty on key

components for manufacture of rotor

blades for wind power

Positive for Suzlon8% Nil

Full exemption from central excise duty

extended to goods supplied to mega power

projects awarded through tariff-based

competitive bidding

Positive for the sector as it will help reduce project

costs5% Nil

POSITIVE

Key positives Increased budgetary allocation, thrust on renewable energy and proposed set up of a coal regulator

Key negatives Increase in MAT and cess on coal


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Realty

Losers | DLF, Unitech, Anant Raj, Phoenix Mills


Sec 65(105) made mandatory which

signifies imposition of service tax on rental

complexes

Negative for annuity business model Anant Raj,

Phoenix Mills

FDI regime for ownership and control

recognised as central to the FDI policyWill encourage FDI in real estate

Sec 25(d) of service tax amended such that

construction of new buildings intended for

sale are deemed to be service provided by

the builder to buyer

Major negative for the sector; step likely taken by the

government to restrict the rising prices in order to

match affordability.

NEGATIVE

Rajiv Awas Yojana (RAY) for slum dwellersand urban poor to extend support to states

that are willing to provide property rights

to slum dwellers

Marginal positive for HDILRs 1.5bn Rs 12.7bn

Allocation for housing and urban poverty

alleviation raisedMarginal positive for the sectorRs 8.5bn Rs 10bn


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Realty

Losers | DLF, Unitech, Anant Raj, Phoenix Mills


NEGATIVE

Further details on service tax amendment [Sec 25(d)] awaited but if implemented in full, it would be negative for the sector; still unclearwhether land costs would be part of calculations

Sec 65(105) was under dispute; final notification in the budget is a key negative for the commercial space and retail customers

Pending projects given another year for

claiming deduction on profits u/s 80IB(10)Marginal positive for large real estate playersUp to 4 years Up to 5 years

Sec 25(d) of service tax amended such that

construction of new buildings intended for

sale are deemed to be service provided by

the builder to buyer

Major negative for the sector; step likely taken by the

government to restrict the rising prices in order tomatch affordability. Negative for whole sector


30/33


Retail


Customs duty cut on raw material

(Rhodium) for jewellery polishingMarginally positive for Titan10% 2%

Excise duty levied on sunglasses (those not

used for corrective vision)Marginally negative for TitanNIL 10%

Customs duty hike on gold bars, coins

Customs duty hike on other forms of goldMarginally negative for Titan

Rs 200 / 10gm

Rs 500 / 10gm

Rs 300 / 10gm

Rs 750 / 10gm

Removal of special additional duty on

watches, garment imports (pre-packed)Positive for all retail companies4% Nil

NEUTRAL

Higher customs duty on gold bars/coins and increased excise on sunglasses (Fastrack) to have marginal negative impact on Titan

Overall, the budget is Neutral for retail companies

Favourable change in income tax slabsPositive for all retail companies as this increases

disposable income in the hands of consumers


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Telecom

Losers | Bharti, Idea, Rcom


Higher rural spending via NREGA and

Other schemes

Positive as majority of subscriber additions come from

rural areas

NREGA:

Rs 391bn

NREGA:

Rs 401bn

Personal tax slabs broadened

Positive as it translates to higher disposable incomes

and hence higher spending on mobile phone

usage/data and VAS

Increase in MAT rateNegative for Bharti, Idea and Rcom. Marginal cash

flow and earnings impact of 2-3%15% 18%

Increase in diesel charges

Negative; will increase network operating expenses for

all telecom players and impact EBITDA margin by ~20-

25bps

Rs 36.4/ltr Rs 39/ltr

NEGATIVE

Increase in MAT rate and diesel charges to have negative impact on profitability


32/33


Others


Hotels: Benefits of investment-linked

deduction extended to new hotels

2-star and above, anywhere in India

Positive for all hotel companies


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Documents

2010 Budget Analysis 26Feb10