Macro Economic Survey 2016: Sensex up 100 pts; FY16 subsidy bill could to be below 2% of GDP

Moneycontrol Bureau1:00 pm Equity benchmarks remained strong after Macro Economic Survey. The Sensex rose 165.92 points to 23141.92 and the Nifty advanced 52.80 points to 7023.40, led by banks.PNB, Bank of Baroda, HDFC Bank and Axis Bank gained 1-2.6 percent. Major lender SBI rallied 3.5 percent.12:59 pm NITI Aayog- vice chairman Arvind Panagariya says twin balancesheet problems cannot be solved by single instrument.According to him, the government should allow 100 percent FDI in asset reconstruction companies.12:57 pm Increase in wages and benefits recommended by the 7th pay commission are not likely to destabilise prices and will have little impact on inflation, says the government.Four R - recognition, recapitalization, resolution, and reform are required to comprehensively resolve the twin balance sheet challenge of public sector banks (psbs) and some corporate houses, it adds.12:54 pm NITI Aayog- vice chairman Arvind Panagariya says Marco Economic survey is recognising instability seen in global economies.The government maintaining fiscal deficit target set for FY17 will be taken positively, he adds.12:51 pm Industrial sector growth: Government says advance estimates of national income 2015-16 shows that the growth of industrial sector is estimated to be 7.3 percent with manufacturing sector growing at 9.5 percent. 12:48 pm "The current account deficit has declined and foreign exchange reserves have risen to USD 351.5 billion in early February 2016," the Finance Ministry tweets.12:43 pm FM says average bank borrowings have risen sharply post hike in US Fed rate.12:40 pm Subsidy burden: Government says total subsidy bill is expected to be below 2 percent of GDP in FY16.12:36 pm Market Update: The 30-share BSE Sensex rose 119.93 points or 0.52 percent to 23095.93 and the 50-share NSE Nifty climbed 37.80 points or 0.54 percent to 7008.40.Bank Nifty gained more than 1 percent after the government, in its Economic Survey 2016-17 says it has given power to banks to recover money from debt ridden promoters.It further says corporate and bank balancesheets remain stressed. Underlying stressed assets in corporate sector must be sold or rehabilitated, it advises.Govt could sell some non financial cos to recapitalisation of PSU banks.12:34 pm Risk to higher inflation arises if wage hikes spill to private sector, says the government, adding it expects RBI to meet 5 percent inflation target by March 2017.12:32 pm Exports slow down may continue for a while before picking up in FY17, says government, adding oil prices spike may drag consumption and hurt monetary easing prospects.12:29 pm Government says underlying stressed assets in corporate sector must be sold or rehabilitated.Growth will face considerable headwinds if global demand remains weak, it adds.12:27 pm Tax revenue likely to be higher than bugeted levels in FY1612:25 pm Govt could sell-off certain non financial companies to recap PSU banks12:24 pm Monetary policy: Government says effective stance on monetary policy could be relaxed. It expects RBI to meet 5 percent inflation target by March 2017.12:22 pm Global volatilities' impact on rupee to be less than other emerging market economies12:20 pm CPI inflation: Finance minister Arun Jaitley says FY17 CPI inflation is expected to be in range of 4.5-5 percent.12:15 pm Government says corporate and bank balancesheets remain stressed. 12:13 pm Fiscal Framework: The government says time is right for a review of medium-term fiscal framework as it committed to fiscal consolidation.12:10 pm Fundamental task of Budget: The government says current fundamental task of Budget is to preserve fiscal sustainability, adding 7th pay commission recommendations complicated FY17 fiscal task.Govt is need to be in a strong position to repay debt of today and public investment needs to be increased further.12:07 pm CAD: Govt sees FY17 current account deficit at 1-1.5 percent of GDP.It expects 8 percent economic growth in next couple of years.It proposes widening tax net from 5.5 percent of earning individuals to over 20 percent.12:05 pm Fiscal deficit: The government says FY16 fiscal deficit of 3.9 percent seems acheivable but FY17 is expected to be challenging from fiscal point of view.It sees medium-term growth trajectory at 7-7.75 percent with downside risks due to global economic condition.12:00 pm Market CheckThe market continued to trade marginally higher in noon trade with the Sensex rising 55.91 points to 23031.91 and the Nifty up 17.10 points to 6987.70.The market breadth remained weak as about two shares declined for every share advancing on the BSE.The government has tabled Macro Economic Survey 2016-17 in parliament. According to sources, the government expects FY17 GDP growth at 7-7.5 percent.