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Mar 18, 2013, 06.34 PM IST | Source: Moneycontrol.com

Live Budget Analysis: Budget not to have impact on sovereign rating, says S&P

Finance minister says no choice but to rationalise spending. The total budget estimate for FY14 at Rs 16.65 lakh crore.

Moneycontrol Bureau

5:23 pm: S&P says Budget not to have impact on sovereign rating

Standard & Poor's said on Thursday India's budget for the 2013/14 fiscal year would have no impact on the country's sovereign credit ratings, warning there was potential for the government to exceed its budgeted spending.

S&P also said there had been "little progress" in structural reforms to reduce the "vulnerability" in the government's fiscal position.

S&P last year cut its outlook on India's "BBB-minus" sovereign ratings to "negative," threatening to push the country into sub-investment category.

5:12 pm:  Q3 GDP At 4.5% Vs CNBC-TV18 Poll of 4.86%

  • Q3 GDP At 4.5% Electricity Sector Growth At 4.5% Vs 7.7% (YoY)
  • Q3 GDP At 4.5% Construction Sector Growth At 5.8% Vs 6.9% (YoY)
  • Q3 GDP At 4.5% Mining Sector Growth At -1.4% Vs -2.6% (YoY)
  • Q3 GDP At 4.5% Manufacturing Sector Growth At 2.5% Vs 0.7% (YoY)
  • Q3 GDP At 4.5% Farm Sector Growth At 1.1% Vs 4.1% (YoY)
 

5:00 pm: Speaking to reporters after his much-hyped Budget 2013-14, finance minister P Chidambaram says the Budget is simply one event in a series of actions the government intends to take to revive the economy, which he admitted was indeed "challenged".

4:00 pm: Former Finance Minister and senior leader of BJP Yashwant Sinha feels, the Budget announced by P Chidambaram was insipid.

"Chidambaram was not comparing budgeted estimates (BE) with budgeted estimates. He was very comparing next years BE with RE. So, the RE came in handy for him to say it has gone up by 40 percent, 60 percent and 20 percent and the ruling benches were applauding ," he told CNBC-TV18 .

3:47pm: Rupee weakens against dollar 

The 10-year yield was up 3 basis points at 7.82 percent from levels before the finance minister began his budget speech.

The rupee weakened against the U.S. dollar, trading at 53.99/54.00 from levels of around 53.70 before the budget.

3:40 pm: The Mauritius problem:

The tax residency certificate (TRC) is now a necessary but not a sufficient condition. Apparently it is being seen as adverse for investors who have come in through the Mauritius route because the Central Board of Direct Taxes (CBDT) circular number 789 on Double Taxation Avoidance Agreements (DTAA) appears diluted. The TRC certificates Section 90 and 90A have been amended to say TRC is necessary but not sufficient to claim benefit and penalty for failure to file returns proposed in the Finance Bill.

3:30 pm: Closing Bell: Sensex, Nifty dip over a percent each; Suzlon biggest loser

Some of the top losers of the day: Suzlon down 34 pct, GVK power down around 10 percent, Reliance Infra loses 9.3 percent, NHPC drops 6 percent, Lanco Infra down 5 percent.

SBI ends the day with losses of nearly 6 percent, PNB drops around 5.8 percent. Banking stocks this month: SBI falls 13 percent, ICICI down 12 percent, PNB loses 11 percent

Aviation stocks this month: Jet falls 13 percent ; SpiceJet down 25 percent , Kingfisher loses 23 percent

Sensex is down 4.8 percent, Nifty loses 5.6 percent this month

3:18 pm: Market registers highest-ever turnover at Rs 4.2 lakh crore. The previous record was Rs 4.16 lakh crore. Could a combination of a boring Budget plus F&O expiry.

Sensex will end the month with losses of more than 5 percent

CNBC-TV18’s Udayan Mukherjee feels market regulator owes some answers to investors after the recent carnage in market. It should not happen, because of the events over the last couple of days, foreign investors should get wary of our markets.

3:00 pm: What looked like a good day for market and investors has now turned upside down. The Sensex is down 298.22 points or 1.56% at 18854.19, and the Nifty down 102.20 points or 1.76% at 5694.70.

Top losers on Nifty: Reliance Infra (-8.77%), SBI (-6.89%), PNB (-6.52%), IDFC (-6.12%) and Power Grid Corp (6.11%).

Get the full picture here

2:45 pm: What will be expensive and what will be affordable now: The layman's Budget for 2013

2:41 pm: The FM borrowing assumptions are "reasonable", says RBI deputy governor Urjit Patel.

"The FM has taken steps to encourage savings away from gold," he told reporters adding, the Budget has laid down the roadmap for fiscal consolidation.

Patel also said no separate norms will be required for the all-women's bank.  (Full address)

2:15 pm: Here's what Twitterati is saying about #Budget2013

Kiran Bedi:

The budget has provided for all. He has increased the outlays and provided for as well. We need to now demand its delivery and governance.

Women bank was populism. For I have already seen women cooperative banks doing very well.

Pritish Nandy:

Wonderful. We can’t stop rapes, crimes against women. But we want to open a bank for women. As if women can’t use normal banks.

Minissha Lamba:

Reactions on Budget 2013?? The extra surcharge on income of individuals earning above Rs 1 crore a year is simply ridiculous.
 
Milind Deora:

This was my tenth budget and undoubtedly the best, given the economic pressures. Highlight was the impetus given to women & skills training.

2:01 pm: Budget has done a great job of addressing the nation's priorities, says ICICI Bank's Chanda Kochhar.

Despite banking stocks tanking post the Budget announcement, Kochhar, felt that the budget had done a great job of addressing the nation's priorities of fiscal consolidation and bringing back investment.

Even Naina Lal Kidwali praised the Budget for not being a populist, pre-election budget. While expenditure allocations have gone up, the level of populism has not been that significant.

2:00 pm: In his Budget speech, Finance Minister P Chidambaram today said that the Direct Tax Code will be introduced in the Budget session of Parliament, indicating that it remains a work in progress.

The proposed tax code was meant to be a combination of major tax relief and removal of most tax-exempted benefits. It is expected to usher in a new tax regime of transparency and greater compliance.

1:52 pm: Missed out on all the market-related annoucements?  Here's a quick recap

1:50 pm: Despite stating that the ballooning current account deficit is a bigger worry than fiscal deficit, Chidambaram did not further raise import duty on gold. (Read the full story here)

1:41 pm: The FM has taken steps to reverse negative sentiments prevailing in the economy, says Prime Minister Manmohan Singh.

"The FM has done a commendable job given economic challenges," he told reporters. 

Singh believes the 10 million jobs per year target 12th Plan can be achieved through 8 percent GDP growth. The 8 percent growth aim is consistent with underlying potential of the country, he says. 

But to achieve that the tempo of growth needs to be accelerated, Singh explains. 

Singh also acknowledged problems with respect to clearances of new projects.  

1:20 pm: Udayan Mukherjee of CNBC-TV18 says

The Union Budget is a non-event for the market and not worthy of the expectations that P Chidambaram might have stoked in his commentary in the past. There are some irritants for the market. The surcharge has gone up. There is a super-rich tax, bank’s convention interest rate subvention will go up which is not very good.

On the other side there are small palliatives like the Securities Transaction Tax (STT) going down on the other hand Commodities Transaction Tax (CTT) has come in.

Barring a couple of small things like maybe a road regulator or the investment allowance, which has come in for infrastructure, and a very small attempt at getting the savings rate higher, not a significant attempt. There is no big bang announcement in this Budget which can re-stroke growth and that is what everybody was looking for.

1:12 am: C Rangarajan says commitment to fiscal prudence positive for economy and FM's roadmap to 4.8% deficit “credible”.

Meanwhile, Uday Kotak believes FM has lived up to his promise on fiscal deficit. 

"Budget good for capital markets and investments," he told CNBC-TV18 in an interview.

1:03 pm: R Jagannathan's Final takeout:

Chidambaram has kept his macro promises on the fiscal deficit; he has taxed the rich in a token way, but nothing significant. His revenue take of Rs 18,000 crore is not a big blow for the economy, but this means one can’t be sure how good his estimates are. His assumptions will tell us whether his Budget outlays are based on reality or just built on hope and hype.

We have to wait for the fineprint to figure out whether he has delivered a clean budget or one with gaping holes and doubtful arithmetic. Given the huge expectations before the budget, Chidambaram has done nothing to rattle the markets or business. But he has not excited the jholawala crowd either before the elections. It is a "responsible" budget, for the simple reason that he has done little for anybody. Compared to expectations, he has delivered a mouse. But that may be better than promising the moon and not delivering.

12:47 pm: "The total tax changes will earn government Rs 13,300 crore from direct taxes, and Rs 4,700 crore from indirect taxes. That's Rs 18,000 crore in all. Chidu calls for voluntary compliance to ensure all service tax payers to start filing returns," Jagannathan comments .

12:46 pm: R Jagannathan says "Excise on cigarettes up 18 percent, SUVs from 27 to 30 percent. Bad for ITC and Mahindra and Mahindra.Duties on mobile phones up, especially those above Rs 2,000 price. Service tax on all airconditioned restaurants even if they don`t serve liquor. The markets have taken the increase in corporate surcharge, and the hike in dividend distribution tax badly despite cut in STT."

12:45 pm: With that Chidambaram concludes his Budget speech. No big bang announcements came through.

The Sensex is down 56.28 points or 0.29% at 19096.13, and the Nifty down 27.10 points or 0.47% at 5769.80. 

Market will probably forget it by tomorrow and look ahead.

12:43 pm: FM increases in import duty on high end motor vehicles from 75% to 100%; and on motor cycles from 60% to 75%.

Excise duty on SUVs raised from 27% to 30%. Will not apply to SUVs registered as taxis

12:43 pm: Eating out becomes expensive! Finance minister plans to impose service tax on all AC restaurants.

12:43 pm: Finance minster hikes Special Excise Duty (SED) on cigarettes by 18%

12:42 pm: Finance minister to introduce DTC Bill in Budget session of Parliament

12:42 pm: Finance minister no change in standard rate of excise duty, service tax

12:42 pm Finance minister: 20% final withholding tax on unlisted companies' share buyback

12:41 pm: Finance minister: Modified provisions under GAAR effective April 1, 2016

12:40 pm: Finance Minister says to incorporate January decisions on GAAR

12:39 pm: Finance minister STT reduced to 0.1% on equity futures

12:37 pm Finance Minister: CTT of 0.01% on non-agri commodity futures

12:36 pm:  Finance Minister: To reduce STT on equity futures, MF units

12: 26 pm: "Only 42,000 people with incomes of over Rs 1 crore. Surcharge of 10 percent for them. Tax administratin reform commission to be set up. Will raise tax-GDP ratio 11.9 percent. Says time for prudence, restraint and patience. Rates of taxes 10-20-30 percent won't be changed. Level of tax-free threshold to be raised: for 2-5 lakh bracket, tax credit of Rs 2,000 to be given. Rs 3,600 crore revenue loss," R Jagannathan says

12:25 pm: Super rich tax; 10% surcharge on income above Rs 1 crore. The surcharge has been hiked to 10% from 5%. 

FM announces 10% surcharge on companies with income over Rs 10 crore.

The 80IA has been extended by one-year. The DDT surcharge raised to 10% from 5%. 

The government will continue with education cess at 3%. 

"The additional surcharge on taxes only for 1 year," FM says.

12:21 pm: The finance minister to set up tax administration reforms commission. He says there is “no case to revise direct tax rates or slabs.

"The tax credit of Rs 2,000 for income up to Rs 5 lakh," the FM announces.

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