Budget expectations from brokerages

A snapshot of market and industry expectations from the union budget, compiled from brokerage reports.

india Updated: Feb 23, 2006 19:11 IST

Following is a snapshot of market and industry expectations from the union budget, compiled from brokerage reports. The Congress party-led alliance will present on Tuesday the budget for the fiscal year starting on April 1.

Broad market expectations

* Focus on infrastructure, especially power, agriculture and food processing industries to aid annual GDP growth of 8 per cent.

* Fiscal deficit target of less than 4 per cent of GDP.

* Peak customs duty to be reduced to 10 per cent from 15 per cent now.

* Sugar, textiles and tobacco to be brought under value-added tax regime.

* Service tax rate to be raised to 12 per cent from 10 percent.

* More services to be brought under the service tax ambit.

* Corporate tax surcharge of 10 per cent to be removed.

* Fringe benefit tax to be simplified.


Capital markets

* Securities transaction tax to be raised and expanded to include off-market deals.

* Mutual funds to be allowed to set off gains from derivatives against general losses suffered during the year.

* Lahiri Committee recommendations on easing norms for foreign institutional investments to be implemented.


* Excise duty on autos to be cut to 16 per cent from 24 per cent.

Banking and Insurance

* Foreign direct investment limit in insurance firms to go up to 49 per cent from 26 per cent.

* Cap on voting rights at 10 per cent for each shareholder in banks to be reviewed.

* Tax concessions to encourage long-term fixed deposits.

* Tax concessions for housing loans to continue.

Oil and Gas

* Subsidy burden on oil companies to be eased.

* Customs duty on petrol and diesel to be lowered to help oil marketing companies reduce their losses.


* Excise duty to be lowered to Rs 350 per tonne from Rs 400.


* Customs duty on several metals to be reduced to 5 percent from 10 percent.

* Excise duty on zinc to be halved to 8 percent to control rising zinc prices.


* Excise duty to go down to 8 per cent from 16 per cent.

* Peak customs duty to be reduced to 10 per cent.


* Tax structure to be simplified to make the shipping sector globally competitive.

* Subsidy of 30 per cent on ship building to be extended for 10 to 15 years.


* Excise duty on ethanol-blended petrol and molasses to be eased.


* Licence fee (percentage of revenue share) for operators to be reduced.


* Import duty to be cut on textile machinery and components.

* Customs duty on synthetic fibres and their raw materials, such as purified terephthalic acid and monoethylene glycol, to be reduced.

* Labour laws to be simplified to allow for use of contract workers.

The expectations are gathered from the reports of following brokerages: BRICS Securities, DSP Merrill Lynch, India Infoline, JP Morgan, Kotak Securities, Khandwala Securities, Sharekhan, and Sushil Finance.

First Published: Feb 23, 2006 13:22 IST