QBudget: Jaitley to Boost Social Sector, Finmin Mulls STT Removal
Here’s a round-up of all news and views ahead of the upcoming Union Budget.
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1. Railway Budget 2016: Suresh Prabhu Fails to Take the Bull by the Horns: BS
Railway minister Suresh Prabhu’s second railway budget came perhaps at the most difficult times for the Indian Railways with the national transporter missing its targets for traffic earnings while facing an additional burden of Rs 28,450 crore on account of increase in staff salary as per the Seventh Pay Commission recommendations.
Prabhu’s hour-long speech, however, skipped the grave numbers which he chose to table before the Lok Sabha as annexure to the speech. This prompted Trinamool Congress benches, led by Dinesh Trivedi, former railway minister, protesting. “Where are the numbers?” Trivedi could be heard saying just as Prabhu wrapped up his speech with a promise to take the Railways to its destination of Samridhi or success. The speech instead focussed on catchy slogans and wooing special categories like women and journalists.
Read more here.
Here’s the full document of the Railway Budget.
2. Social Sector Ministries Likely to See Increase in Oultay: ET
Social sector ministries, which had seen massive budget cuts in 2015-16, are likely to get a shot in the arm in the next financial year. Implementing Prime Minister Narendra Modi’s pet projects and e-governance initiatives, panchayati raj and social justice and empowerment ministries are likely to see an increase in their outlays in 2016-17 fiscal.
Leading the pack is panchayati raj, a prominent ministry under the Congress-led UPA that had been rendered irrelevant when finance minister Arun Jaitley brought its budget down from Rs 7,000 crore to a meagre Rs 94 crore in 2015-16. According to sources, the ministry is likely to see over two-fold jump in its budget for the next fiscal.
Read more here.
3. Is Indian Railways Moving to Dynamic Pricing of Fares?
With finances under strain, Railway Minister Suresh Prabhu on Thursday left fares unchanged and assured independence of a proposal rail regulator for fixing realistic fares, raising questions on whether the transporter is moving towards dynamic pricing of freight and fare.
Presenting the Rail Budget, Prabhu said the Indian Railways will ensure the independence of the Rail Development Authority proposed last year to enable fair pricing of services.
Apart from fair pricing, the authority has been envisaged to enable promotion of competition, protection of customer interest and to maintain efficient standards.
Read more here.
4. Budget to Budget: Sensex Logs Worst Returns in 10 Years: ET
BSE benchmark Sensex logged its worst budget-to-budget fall in at least 10 years in the year gone by, as global equities fell into the bear grip and earnings failed to meet expectations due to a delay in the government’s reform initiatives.
Data compiled by ETMarkets.com showed the 30-pack index has fallen 20.59 per cent so far since the Union Budget 2015 (2015-16), which was unveiled on February 28, 2015.
Previously, the worst fall seen in the Sensex before this was in the year to Budget 2009. That year, the Sensex had slumped 20.11 percent.
Read more here.
5. Markets Fear Long-term Capital Gains Tax Holding Period for Stocks Could be Raised: Livemint
The fear that the finance minister may raise the holding period for equities to qualify as a long-term capital asset from one year to up to three years in the Union budget on 29 February has made market participants nervous.
The move will likely hit traders and institutional investors more than it does retail investors, although it could deter retail investors from investing in equities, an asset class they already shun.
If the change is made, it will mean that long-term capital gains (LTCG) tax will be applicable to stock market holdings even after a year and the gains will be exempt only when equities are held for at least three years.
Market participants say the move could further discourage retail investors from entering the equity markets.
Read more here.
6. Budget 2016: FM Arun Jaitley Cancels Meeting With Economists: ET
Finance Minister Arun Jaitley’s meeting with the economists just two days ahead of the Budget, which had generated a lot of curiosity, has been cancelled.
The 90-minute meeting with the economists on Saturday, ahead of the Budget presentation for 2016-17, was confirmed by Ministry spokesperson who described it as one to explain “economic analysis of macro-economic situation” after the presentation of Economic Survey.
The meeting generated a lot of curiosity with some commentators saying Jaitley might be meeting economists to get a grip on some quick-fix measures to package a bitter pill for the economy.
Later in the day, the spokesperson said the meeting with economists and financial experts has been called off due to pressing engagements of the Finance Minister.
Read more here.
7. MFs Want Budget to Redefine Equity Funds: BS
The mutual fund sector wants the government to tweak the definition of equity funds so that funds investing 50 percent in equity instruments are treated as equity funds as opposed to the present limit of 65 percent.
Read more here.
8. Food Ministry Seeks 1.4 Lakh Crore as Subsidy for FY17: BS
The food ministry is seeking a 12.52 percent increase in food subsidy for the next fiscal at about Rs 1.40 lakh crore mainly to implement the food law, which is likely to be rolled out in nearly all the states from April.
In last year’s Budget, the government had earmarked Rs 1,24,419 crore for food subsidy for the current fiscal. Out of this, nearly Rs 65,000 crore was for implementation of National Food Security Act (NFSA).
According to sources, the food ministry has demanded about Rs 1.40 lakh crore for the food subsidy in the upcoming budget for the next financial year.
The overall demand of Union Food and Consumer Affairs Ministry is about Rs 1.82 lakh crore, source added.
Read more here.
9. Finance Ministry Seeks Experts’ Views on Impact of Security Transaction Tax Removal: ET
The Finance Ministry has sought suggestions from leading tax experts and market participants on the implications of scrapping security transaction tax (STT)—a levy on transactions done on stock exchanges.
Tax consultants said the government wants to understand the impact of doing away with STT as it mulls stretching the period for applicability of longterm capital gains tax from one year to three years.
STT is collected by the broker in addition to the brokerage soon after a trade is completed. A section of the market—short-term traders and arbitrageurs-—have been asking for a removal of STT because it squeezed their margins. The government in the Budget of 2013-14 cut STT on equities and mutual fund units. In the last few days, top tax experts have been sounded out by the finance ministry on the matter.
Read more here.
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