Budget 2015


Union Budget 2015-16 Economic Survey: Projects worth Rs 8.8L-cr stalled but situation improving

Unfavourable market conditions and delayed investments in last few years resulted into an “alarmingly high rate” of increase in stalled projects which, as of December-end, stood at a staggering Rs 8.8 lakh crore, says the Economic Survey for 2014-15. However, the stock of stalled projects plateaued in last three quarters to stand at 7 percent of the GDP at the end of October-December quarter from 8.3 percent in last year, the Survey said. ”

Manufacturing dominates in total value of stalled projects even over infrastructure. The government’s stalled projects are predominantly in infrastructure. “Unfavourable market conditions (and not regulatory clearances) are stalling a large number of projects in the private sector and in contrast, regulatory reasons explain bulk of stalling in the public sector” it added. Manufacturing sector was stifled by a general deterioration in the macroeconomic environment, while electricity projects are victim of lack of coal.

“It is clear that private projects are held up overwhelmingly due to market conditions and non-regulatory factors whereas the government projects are stalled due to lack of required clearances,” it said. Out of the Rs 8.8 lakh crore worth of stalled projects, public and private sector accounted for Rs 1.8 lakh crore and Rs 7 lakh crore, respectively.

“Clearing the top 100 stalled projects will address 83 percent of the problem of stalled projects by value,” it added.

“At the end of the third quarter of the current financial year, for every 100 rupees of projects under implementation, 10.3 rupees worth of projects were stalled and the number of private sector stood at 16,” it said.

“In terms of share in total, electricity and services dominate for both public and private sectors, while manufacturing forms the major component of stalled projects in the private sector,” it added.


Union Budget 2015-16 : Economic Survey makes a case for liberalising FDI in retail

Economic Survey_5

Economic Survey has made a case for liberalising FDI in retail, saying that it would help bridge investment and infrastructure deficits and improve supply chain management. The Survey stated that India remains an attractive destination for long-term retail investment despite the sector facing many challenges in past few years. It highlighted that 58.3 percent of Indian population is below 30 years.

Around 31 percent of this population living in urban areas with rising disposable income makes one of the key positives for the future of the retail sector. Citing AT Kearney’s Global Retail Development Index, the Survey said India’s retail trade ranking slipped to 20th in 2014 from 14th in 2013. It said in view of difficulties in attracting domestic capital for setting up marketing infrastructure, particularly warehousing, cold storages and laboratories, “liberalisation of FDI in retail could create the possibilities for filling in the massive investment and infrastructure deficit which results in supply-chain inefficiencies”.

India needs billions of dollars in logistics development as every year huge amount of vegetables, fruits and foodgrains go waste because of poor and inadequate storage facilities in the country. Interestingly, BJP, in its manifesto, had said that it will keep FDI out of the key sector of multi-brand retail. As per the current policy, 51 percent FDI is allowed in the multi-brand segment while 100 percent is permitted in single brand retail trading.

Both the decisions were taken by the earlier UPA government. Although, the UPA government had allowed FDI in multi’brand retail, only one investment proposal of UK based Tesco was cleared during its regime. Noting the changes taking place in the sector, the Survey said: “Migration from traditional stores to modern retail continues, though the latter accounts for only 8 percent of the total market.”


Union Budget 2015-16 Economic Survey: FY16 GDP growth seen 8.1-8.5%, scope for big reforms

The Economic Survey for 2014-15 has projected a growth of 8.1- 8.5 percent for FY16, and said there was scope for big bang reforms. It sees growth rate for the current fiscal at 7.4 percent. The Survey said the government was committed to fiscal consolidation, and that the outlook for the domestic macroeconomic was optimistic. The Survey said a double digit growth trajectory was now a possibility, also because inflation was showing a declining trend. The Survey said outlook for external financing was currently favourable, and that the government should control its expenditure to reduce fiscal deficit.

The trend of subdued export performance was key and saving-investment dynamics will be crucial for growth, the Survey said. Among other things, the Economic Survey 2014-15 has recommended that enhanced revenue generation should be a priority of the government, going forward. In addition, the government should meet its medium term fiscal deficit target of 3 percent of GDP, the Survey said.

The Expenditure Management Panel’s recommendations should help the government reprioritize its spending, the Survey said, adding that non-Plan expenditure would have to be trimmed and food subsidies rationalised. The Survey estimates current account deficit at 1.3 percent of GDP this fiscal. They Survey saw turmoil in the Eurozone and interest rate policy in the US as key external risks.


Union Budget 2015-16 India Pre-Update : Bulls super charged for Budget, Banks lift Sensex 473 pts

3:30 pm Market closing: It was a super run up to the Budget as bulls seem excited ahead of FM arun Jaitley’s speech tomorrow. The Sensex was up 473.47 points or 1.6 percent at 29220.12,and the Nifty ended 160.75 points or 1.8 percent at 8844.60. About 1817 shares have advanced, 1065 shares declined, and 204 shares are unchanged. PSU banks lead the upmove while HDFC Bank twins, ICICI Bank and Axis Bank were top gainers in the Sensex. Among the losers were ITC, GAIL, Wipro and HUL.

3:28 pm Market Expert: “After having seen a pragmatic & a transformational Railway Budget which laid down a vision for modernization/up gradation of overall rail infrastructure & enhancement of customer experience, which was beyond the announcement of new trains, the investing community was clearly encouraged by the Economic Survey which pointed out that the current macroeconomic scenario in India is more favorable than in other economies,” says Devang Mehta, Senior VP & Head – Equity Advisory at Anand Rathi Financial Services. “India has reached a sweet spot and that there is a scope for Big Bang reforms now. It also opens up space for the Reserve Bank of India to cut interest rates. Coupled with the forecast of a normal monsoon, this is likely to boost growth in the coming financial year. This also raises the expectations from the Union Budget due to be presented tomorrow,” he adds.

3:25 pm Market extends gains: Realty and PSU banks led the market upmove today with the BSE Realty Index rising over 4 percent. All sectoral indices except FMCG are trading in green. ICICI Bank and L&T are top contributors to Nifty’s gain.

3:21 pm Clean Energy: India’s renewable energy industry is likely to generate business opportunities worth $160 billion in the next five years, the Economic Survey said on Friday, the day before a budget that is set to boost clean energy funding. Prime Minister Narendra Modi is banking on renewables to fight climate change rather than committing to emission cuts like China. He has set ambitious clean-energy targets including raising solar capacity fivefold to 100 gigawatts (GW) by 2022. “It offers a very good opportunity for businesses to set and scale up industry, leapfrog technologies and create volumes,” the economic survey report said. The report, authored by the government’s chief economic adviser, Arvind Subramanian, said “immediate plans” include scaling up total renewable capacity to 170 GW from 33.8 GW. U.S.-based SunEdison and First Solar have already said they would build more than 20,000 megawatts of clean energy capacity in India by 2022.

3:18 pm Chief Economic Advisor says: Economic Survey was written without being constrained by politics. According to advisor, the big picture today is that India is in a sweet spot.

3:14 pm Market Extends gains: The Sensex is up 488.65 points or 1.70 percent at 29235.30, and the Nifty up 166.90 points or 1.92 percent at 8850.75.

3:10 pm TRAI says: Telecom Regulatory Authority of India (TRAI) issues draft amendment to telecom tariff order 1999 for tariff revision. TRAI intends to reduce ceiling tariffs for national roaming services. TRAI proposes ceiling tariff of 65 paise per minute for outgoing local calls, ceiling tariff of Re 1 per minute for outgoing inter-circle call. The regulator proposes ceiling tariff of 45 paise per minute for incoming roaming calls. It proposes ceiling tariff of 20 paise per SMS for outgoing local SMS and 25 paise per SMS for outgoing inter-circle SMS.

3:06 pm PM Modi says: The Government is ready to change Land Bill if it is proved anti-farmer, says PM, adding, “We can make changes to Land Acquisition in interest of farmers.” The Government has altered Land Acquisition Bill based on demands of chief ministers. PM Modi urged opposition to support Land Bill.

3:04pm Expert on Economic Survey: The Economic Survey indicates much larger fiscal headroom becoming available to the Government on account of expected growth in the economy, lower oil prices and better targeting of subsidies, says Ranen Banerjee Partner – Public Finance and Urban Development, PwC India. The Finance Commission Report, Railway Budget and now the Economic Survey convey a lot of confidence among the policy makers, he adds. PwC expects that the Finance Minister will be able to reverse the decline in gross capital formation and also give further push to local consumption by leaving more money in the hands of the taxable population in his first full year budget.

3:00 pm Market Update: Buying interest continued in the market. The Sensex shot up 411.47 points or 1.43 percent to 29158.12 and the Nifty climbed 143.05 points or 1.65 percent to 8826.90 while the BSE Midcap gained 1.5 percent and Smallcap rose 1.23 percent. Advancing shares outnumbered declining ones on the Bombay Stock Exchange by a ratio of 1735 to 1067 on the BSE. Tata Power, Bank of Baroda and JSPL topped the buying list on Sensex, up 5 percent each followed by Larsen & Toubro, Sesa Sterlite, ICICI Bank, SBI, NMDC and IDFC with 3.5-4.5 percent.

2:50 pm Interview: “Housing for all should be demand booster for sanitation industry, says Cera Sanitaryware. The management told CNBC-TV18 that there are no orders from government yet, but the company is seeing enquiries from corporates who want to build toilets for CSR (corporate social responsibility). Margins from orders for low cost housing will be lower than other products, it adds.

2:49 pm Expert on Economic Survey: “Economic Survey rightly highlights the need for big bang reforms and focus on investment cycle to revive to economy,” says Rajat Rajgarhia,MD – Institutional Equities at Motilal Oswal Securities. The Economic Survey also highlights the need for fiscal consolidation and delivering the subsidies in a proper manner so it meets the purpose, he adds. “With inflation below target levels and space for monetary easing, the Budget can well lay out clear roadmap to accelerate the growth momentum for India. Investors across the globe are looking at this event with lot of interest and will surely have a favorable view, once the Budget lays out the growth agenda,” Rajgarhia says.

2:47 pm PM Modi says: Government believes in optimum utilisation of infrastructure. Have prevailed on black money issue in G20. Nobody will be shielded in black money probe.

2:42 pm Economic Survey:The Economic Survey 2014-15 has recommended that private investment must remain primary engine of the economy’s long-term growth. It expects growth to be boosted from FY17 onwards once the Goods and Services Tax is implemented. It said that greater public investment in Railways will boost manufacturing competitiveness. The Rail Budget has hiked its Plan outlay for FY16 by 52 percent to Rs 1 lakh crore and set a capex target of Rs 8.5 lakh crore over the next five years. The Survey expects liquidity conditions in FY16 to remain comfortable and said that lower inflation has opened up space for reduction in interest rates.

2:37 pm Brokerage view: Deutsche Bank has buy rating on Jubilant Foodworks with a target of Rs 1850 per share. Bedrock of longstanding positive view on Jub Food is from higher operating leverage resulting in a 53 percent earnings CAGR over FY15-17E forms.

2:32 pm Economic Survey: Indian firms mopped up Rs 2.81 lakh crore from the markets during April-December period of the ongoing fiscal, with debt emerging as the most preferred route to garner funds for business needs, says the Economic Survey 2014-15. The trends remained sluggish in the primary stock market ‘ where the companies raise funds through the sale of shares via instruments like IPOs and FPOs ‘ despite a bullish equity market. It has been private placement of corporate bonds that was used the most to meet funding requirements of businesses during April-December period of the current fiscal (2014-15).

2:27 pm Gainers & losers: Tata Power is up 5.5 percent, L&T, ICICI Bnak, SBI and Sesa Sterlite are top gainers in the Sensex. Among the losers are ITC, GAIL, Wipro, TCS and HUL.

2:20 pm PM Modi says: Have raised over Rs 1 lakh crore from coal block auctions so far. Land acquisition ordinance is not anti-farmer. MNREGA will stay and we will take it forward.

2:15 pm PM Modi says: The nation has progressed due to efforts of every govt. Corruption remains an issue of concern.

2:10 pm PM Modi addresses Lok Sabha ahead of Budget. He says issue is about development, not about names of schemes. Stressing on Swach Bharat campaign, the PM also adds that cleanliness is key issue, need to address the root problem.

It’s a terrific day on Dalal Street as the market is enthused by the Economic Survey and government’s commitment to fiscal consolidation. The Nifty scored a century hitting 8800 while the Sensex rose more than 400 points. The Macro-Economic Survey for FY15 painted an optimistic picture says India has reached a sweet spot and there is scope for big bang reforms now. FY16 GDP growth is seen at 8.1-8.5 percent. Economic Survey says the government will adhere to a fiscal deficit target of 4.1 percent of GDP in FY15. The Sensex climbed up 401.94 points or 1.40 percent to 29148.59 and the Nifty rose 130.40 points or 1.50 percent to 8814.25. About 1713 shares have advanced, 989 shares declined, and 199 shares are unchanged on the BSE. The market will have special trading session on Saturday for Union Budget FY16.

The market will have special trading session on Saturday for Union Budget FY16. Pratik Gupta of Deutsche Equities says Union Budget will be growth oriented like the Rail Budget was. He expects much higher allocation to banks for recapitalisation. He also says the brokerage will buy Indian markets on every dip. Shares of ICICI Bank, L&T, Sesa Sterlite, Tata Power, Tata Motors, SBI and Hindalco topped the buying list on Sensex, up 3-5 percent. Global markets are quietly positive. China closed with gains of more than 0.3 percent while European markets too traded in the green. Investors are closely watching the second reading of the US Q4 GDP numbers later today. Analysts expect US GDP growth of 2.1 percent after 3.9 percent in third quarter.

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