FM balances budget well: Nirmal Bang

The report says, "Finance Minister faced challenges of managing deficit and supporting growth in current budget. We feel he was able to balance both these aspects by increasing excise duty by 2%, resulting in reducing fiscal deficit from 6.9% to 5.5%, and increasing planned expenditure by 18.4% as compared to 14.9% in the previous budget."

"The increase in excise duty by 2% will have negative impact on sectors like cement, metal & FMCG as they may not be able to pass on the cost. However, the impact will be neutral for sectors like Pharma & Auto, which can pass the increased cost. In fact various auto companies have already announced increase in prices," according to Nirmal Bang report.

The report also says, "Aggressive increase in slab for Personal Income tax will improve the purchasing power of individuals and will help bring black money back into the system. Increased purchasing power will act positive for sectors like Auto, Retail, Entertainment, Real Estate & FMCG companies. The banking license to more players will act positive for strong NBFCs like Reliance Capital, Bajaj Auto Finance, Mahindra & Mahindra Finance, L&T Finance, IFCI etc. But the approval and implementation of this policy will be major issue as RBI does not favor this policy."

"FM has increased the base for collection of Service Tax by bringing services like Air Ticket, Rail Freight, Port Services etc, into the service tax net. The diesel and petrol prices are increased by Rs 2.58 and Rs 2.67 respectively, which will have direct impact on transportation of materials and will have negative impact on overall economy. Overall FM has balanced the budget well and will find acceptance from the equity market."

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