Budget 2008 ( Main Points)

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- Dividend Distribution Tax unchanged at 15%
- Central Sales Tax cut to 2% from 3% - Positive for Food Processing companies - Buy Nestle
- India to start GST from April 1, 2010
- No Change in STT Rates
- To withdraw banking cash transaction tax from April 1, 2009
- To give 5 Year Tax Holiday for Hotels in some areas
- Increase in short term capital gain tax from 10% to 15%
- On an income of Rs5 lakhs - savings amount to Rs 45,000
- To grant 5 year tax holiday for new hospitals to be setup in specified areas - +ve for Apollo Hospital, Fortis etc.
- Weighted deduction of 125% for R&D - Recommended Buy on Ranbaxy Labs and Dr Reddy Labs
- Major Income tax Changes - to boost consumer spending -Recommended Buy Marico and GSK Consumer
- No change in corporate tax rate and no change even in surcharge
- In case of Women, Exemption limit increased to Rs1,80,000
- Senior citizen exemption raised from 1,95,000 to 2,25,000
- Proposes to increase personal income tax exemption limit to Rs1,50,000
- Minimum relief Rs4000 for every assesse
- Excise duty on bulk cement imposed at Rs400/tonne or 14% Ad valorem whichever is higher - Neutral for Cement companies
- Customised software under service tax net
- Higher excise on packaged software (8% to 12%) - Negative for Software sector
- To tax Filter and Non Filter Cigarettes on Par - Marginally negative for ITC
- Fall in duty on wireless data cords from 16% to Nil - Positive for Telecom Sector
- No change in excise duty structure on Retail Cement
- To cut excise duty on all goods in Pharma from 16% to 8% - Positive for Pharma Sector
- To cut excise on some papers, paper products
- To reduce excise duty on two wheelers from 16% to 12% - Recommended Buy Bajaj Auto
- To reduce excise duty on small cars from 16% to 12% - Recommended Buy Maruti and Tata Motors
- To reduce General CENVAT rate from 16% to 14%
- To cut customs duty on crude, unrefined sulphur
- To cut project import duty to 5% from 7.5%
- Custom Duty reduced to Nil on Steel melting scrap from 5% - Positive for Non Integrated Steel Players
- India to cut duty on certan bulk drugs to 5% - Positive for Pharma Sector
- Proposes No Change in Peak Customs Duty
- Current Tax-GDP ratio at 12.5%
- Fiscal Deficit to be 2.5% by FY09 - Need only 1 year to eliminate Revenue Deficit
- Revenue Deficit to be 1.4% and Fiscal Deficit to be 3.1% of GDP
- Planned Expenditure about 34.2% of total expenditure
- India to spend Rs 1.05Trn on Defense sector, up 10% - Positive for Defense Companies
- Allocation for TUF loan hiked about 20% - +ve for Textile Sector
- Thrust on Smart Cards - recommended Buy on Bartronics India
- Accelerating bidding process for 5 UMPPs - +ve for PFC
- Likelky Subvention of agri loans waivers to neutralise impact on banks
- Government allocates RS16.8bn for IT Sector - Recommended Buy on 3i Infotech and TCS
- India to spend more on Textile Sector - recommended Buy on Bombay Dyeing & Alok Ind
- India to get as much as $8bn from latest Gas, Oil Auction
- India to allocate Rs129 bn for highways - recommended Buy on HCC,IVRCL
- National Fund for Power Transmission and Distribution
- To award 4th UMPP shortly - +ve for Power Sector
- India to achive power expansion target in 11th plan - +ve for Companies like BHEL
- Waiver of previous loans and fresh loans - Positive for Agriculture/ Fertiliser companies
- India to spend more on Rural Development and Roads - Positive for Infrastructure sector
- Manufacturing slowdown due to rising rates and rupee
- Growth in capital goods still high at 20.2%
- Savings Rate at 35.6% and Investment Rate at 36.3% by end of 2008
- Total value of overdue loans including OTS at Rs60,000cr
- Debt Waiver to be completed by June 30 2008 - Farmers to be eligible for fresh loans post waiver
- Clarity awaited on details of scheme regarding reimbursement to banks of waiver amounts
- Waiver Amounts to 4% of Total Bank Loans
- Scheme of debt waiver of all agri loans upto March 2007 - Negative for Banking Sector
- FM eyeing Elections - Slew of populist measures announced
- Complete waiver of loans for marginal and small farmers
- Government introduces scheme for debt waivers for farmers
- FM says fertiliser subsidy to continue
- 5 lac hectare increased irrigation potential
- India to spend Rs200bn on irrigation-Positive for Finolex Ind and Jain Irrigation
- Government to spend additional Rs120bn on 5-Yr plan programs
- Government increases thrust on santitation - recommended Buy Electrosteel Castings
- Increase in sanitation allocation positive for DI pipe makers such as Electrosteel castings
- Increased allocation to Rajiv Gandhi Drinking water scheme to Rs7300cr from Rs6500cr, beneficial to companies like IVRCL
- Increased spending on polio to benefit Panacea Biotech
- India to spend Rs120bn on National Rural Health Plan
- Education and Health Sector to be twin pillars of growth
- 16,534cr allocated for Health Sector an increase of about 15%
-Additional allocation for education beneficial for Everonn,Educomp,Core Projects,NIIT etc
- India to increase spending on Bharat Nirman plan
- Allocation for education to be raised to Rs34,400cr from Rs28,674cr
- Allocation for education to be increased by 20%
- India to increase Gross Budgetary support in FY09
- Agriculture estimates to grow at 2.6% for FY08
- FM confident of maintaining 8.8% GDP growth average
- FM says agri growth disappointing

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