Key Expectations - Budget 2013-14 - Nirmal Bang

Import duty on gold: Levy of import duty on gold is highly probable as it would have twin effects-increase revenue for the government and help in curtailing the burgeoning demand for the yellow metal.

Restoration of FIIs' confidence: With Finance Minister P.Chidambaram accepting the Shome Committee's recommendations on tax anti-avoidance regulations, we expect a time-bound roadmap for implementation of the same.

Flagship programmes to witness limited fund allocation in Budget: With the government committed to curtail expenditure, we expect some flagship programmes to witness restricted budgetary allocation.

Hike in indirect taxes: We expect the government to go for selective hike in customs and excise duties.

Disinvestment target to remain flat: We expect the disinvestment target for FY14 to be revised upwards from Rs300bn to Rs400bn.

Not much for the common man: The Budget may not have much for the common man except for changes in terms of benefits and improved liquidity in RGESS, primarily meant for inducing higher retail participation in equities.

Focus on plugging subsidy leakage: We expect the Budget to have a concrete roadmap for effective implementation of linking Aadhar numbers provided by the Unique Identification Authority of India (UIDAI), with respective beneficiaries' bank accounts to minimise leakage of benefits.

Subsidy rationalisation: We expect the government to look at another tranche of fuel price deregulation and also focus on hiking urea prices. However, food subsidy may be on the rise as the government plans to roll out the Food Subsidy Bill soon. We expect the rollout to be partial so as to limit its implications on the exchequer.

Infrastructure to remain key focus area: We expect the government to keep its focus on incentivising investments in infrastructure through tax benefits, higher fund allocation to key infrastructure development programmes, policy reforms to increase private participation via the public-private partnership (PPP) route and easing borrowing norms under the External Commercial Borrowing (ECB) route.

More aggressive reforms: We expect the Budget to come out with aggressive reform measures and a clear roadmap to elevate the private sector's confidence in the economy and revive capex. Some of the likely reform measures are:

- Roadmap for implementation of Goods and Services Act – Goods and Services Tax (GST) and Direct Tax Code (DTC).

- Ease borrowing norms and award more infrastructure projects under the PPP route.

- Time-bound roadmap for mining, land acquisition and insurance bills.

Source : Equity Bulls

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