Budget Reactions from Mr. Ravi Uppal, Vice Chairman & MD, ABB India - Views on News from Equitymaster

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  • Mar 1, 2003 - Budget Reactions from Mr. Ravi Uppal, Vice Chairman & MD, ABB India

Budget Reactions from Mr. Ravi Uppal, Vice Chairman & MD, ABB India

Mar 1, 2003

Macro Comments

  • On the macro level it is a budget aimed at the common man and has something for every sector i.e. infrastructure, agriculture, industry and services.

  • The budget should see the return of an overall ‘feel good’ factor and aims at increasing the spending power of consumers through several benefits by way of income tax relief, medical benefits, LTC, removal of dividend tax etc

  • Fiscal deficit continues to remain high and here the focus must remain on the quality of the deficit i.e. Infrastructure investment as opposed to government expenditure.

  • It is focused on stimulating consumer demand, which should have a multiplier effect and in turn fuel industrial growth.

  • On the infrastructure front , a significant project outlay (Rs 600 bn) has been announced , focusing mainly on roads, airports, ports, water etc. with private sector participation

  • Housing & construction have been given a boost – this is good for derived demand and infrastructure development.

  • Core sector industries should benefit along with others like automobiles, textiles, white goods, IT, telecom etc. and increased focus on healthcare and tourism.

  • Reduction of peak rate in customs duties from 30% to 25% and simplification of excise duties to a three-tier structure are positive moves from an industry perspective.

  • Although the dividend tax has been abolished the burden has been shifted on to corporates through distribution tax.

  • All listed equities acquired from 1st March 2003 and sold after lapse of one year or more have been exempted from capital gains tax.

  • Procedural simplifications aimed at cutting down bureaucracy & red-tape should assist in speeding up transactions and helping the economic recovery gain momentum. Moreover the FM has reposed greater trust in the people.

Power Sector

  • The FM once again reiterated the intention of passing the Electricity Bill in this session. This will go a long way in giving more structure and direction to the power sector and laying out a blueprint for the sector reform process which is already underway

  • The budget was largely silent on specific power sector outlay and distribution reforms e.g. APDRP funding etc.

  • There is a provision to extend the mega power project benefits to all generation projects that meet the mega power project criteria, in order to give a fillip to power generation. This in turn has an effect on follow through transmission & distribution.

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