Budget 2008 Pours Cold Water On Capital Market

India's national budget dampened hopes of investors, with key market indices ending the day with losses even as Finance Minister P. Chidambaram hiked tax on short-term capital gains but left corporate taxes and securities transactions tax (STT) unchanged.

Moreover, the finance minister's announcement that the government will consider ways to manage capital inflow into the markets was not well received by the secondary markets.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened at 17,779.54 points and notched a high of 17,779.54 before closing at 17,578.72 points.

It lost 245.76 points or 1.38 percent at the day's close.The broader 50-share S&P CNX Nifty index on the National Stock Exchange (NSE), which opened at 5,285.00 points, closed at 5,223.50 after touching the day's high at 5,290.80 points.

At close, it registered a fall of 61.60 points or 1.17 percent.The market, which started the day in the negative zone on weak global cues and budget apprehensions, continued the downward slide. At one point the benchmark index lost nearly 500 points.

However, following clarity on the impact of the farm loan waiver on the banking industry, markets managed to partly recover, riding on banking stocks in the final trading session. Leaving aside automobile and gems and jewellery, most other sectors received no significant benefits, which, according to market analysts, may have adverse effects on the already volatile Sensex in coming few weeks.

Explaining the long-term impact, S.P. Tulsian, head of SPTulsian.Com, said: 'Overall, it is a negative budget for the capital markets. Chidambaram has gone in for a populist move. The hike in capital gains tax, unchanged corporate tax and STT will heavily affect the sentiments of the market.

'The BSE Midcap index, which closed at 7,680.39 points, went down 31.37 points or 0.41 percent.The BSE Smallcap index, which closed at 9,628.13 points, went down 40 points or 0.41 percent.

On BSE, the market breadth was negative with low trading volumes. A total of 1,067 shares advanced, 1,630 shares declined and 46 shares remained unchanged.Asian and European markets also closed in the red Friday.

The top gainers of the day at BSE included State Bank of India at Rs.2,109.70, up 3.48 percent, CMC Ltd at Rs.924.80, up 8.24 percent, GlaxoSmithKline at Rs.1,109.40, up 4.52 percent, Maruti Suzuki at Rs.867.20, up 32.25 percent, and Aventis Pharma at Rs.942.30, up 3.29 percent.

The top losers of the day at BSE were Seimens Ltd at Rs.816.70, down 52.32 percent, Reliance Capital at Rs.1818.25, down 4.46 percent, Infosys at Rs.1,546.85, down 3.29 percent and Titan Industries at Rs.1,097.60, down 3.42 percent.

Source: News Post India

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Budget 2008-2009: FM's Budget Speech

Mr. Speaker, Sir
I rise to present the Budget for 2008-09. This House and the United Progressive Alliance Government have bestowed upon me the honour of presenting all five Budgets on behalf of a Government - a rare honour that I have the privilege to share with only one of my distinguished predecessors, Dr. Manmohan Singh.

I. THE ECONOMY: AN OVERVIEW

2. Honourable Members! The India growth story, so far, has been an absorbing and inspiring tale. Beginning January 1, 2005, the economy has recorded a growth rate of over 8 per cent in 12 successive quarters up to December 31, 2007. In the first three years of the UPA Government, the Gross Domestic Product (GDP) increased by 7.5 per cent, 9.4 per cent and 9.6 per cent, resulting in an unprecedented average growth rate of 8.8 per cent. In the current year too, according to the Advance Estimates by the Central Statistical Organisation (CSO), the growth rate will be 8.7 per cent - although I am confident that we will maintain the average of 8.8 per cent. The drivers of growth continue to be "services" and "manufacturing", which are estimated to grow at 10.7 per cent and 9.4 per cent, respectively.

3. Nevertheless, 2007-08 has been the most challenging of the last four years. At the beginning of the year, the outlook for the global economy was benign. Our economy, thanks to our own policies as well as globalisation, was poised to record another year of high growth: in fact, the first half of 2007-08 returned a growth of 9.1 per cent. However, since August 2007, the financial markets in the developed countries have witnessed considerable turbulence that has not yet abated. The consequences for developing countries are also not yet clear.

4. Moreover, agriculture has struck a disappointing note. Despite a fine start in the first half of 2007-08, the growth rate for the whole year in agriculture is estimated at only 2.6 per cent.

5. There are other downside risks too. World prices of crude oil, commodities and food grains have risen sharply in the period April 2007 to January 2008. The position of crude oil is well known to this House. Among commodities, the prices of iron ore, copper, lead, tin, urea etc are elevated. The prices of wheat and rice have increased in the world market by 88 per cent and 15 per cent, respectively. All these trends are inflationary, and there is pressure on domestic prices, especially on the prices of food articles. Consequently, the management of the supply side of food articles will be the most crucial task in the ensuing year.

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Budget 2008 At a Glance

1. Budget at a Glance
2. Receipts
3. Expenditure
4. Central Plan Outlay
> Central Plan Outlay by Sectors
> Central Plan Outlay by Ministries/Departments
5. Highlights of Central Plan 2008-2009
6. Resources Transferred to State and U.T. Governments
7. Explanatory Notes

Key Features of Union Budget 2008-2009

THE ECONOMY : AN OVERVIEW

• The Gross Domestic Product increased by 7.5 per cent, 9.4 per cent and 9.6 percent
  in first three years, of the UPA Government resulting in an unprecedented average
  growth rate of 8.8 per cent. The drivers of growth continue to be 'services' and
  'manufacturing' which are estimated to grow at 10.7 per cent and 9.4 per cent
  respectively.
• Growth rate in agriculture for 2007-08 is estimated at 2.6 per cent.
• Food grain production in 2007-08, estimated at 219.32 million tonnes-an all time
  record. Rice production at 94.08 million tonnes, maize at 16.78 million tonnes,
  soya bean at 9.45 million tonnes, cotton at 23.38 million bales each, an all time
  record.
• Rashtriya Krishi Vikas Yojana launched with an outlay of Rs. 25,000 crore, National
  Food Security Mission with an outlay of Rs. 4,882 crore under National Policy for
  Farmers in the Eleventh Five Year Plan.

THE GROWTH STORY : FASTER AND MORE INCLUSIVE

• Agricultural credit poised to reach Rs. 2,40,000 crore by March, 2008.
• 11.4 crore children covered under Mid Day Meal Scheme, the largest school lunch
  programme in the world.
• Under National Rural Health Mission 8,756 primary health centres have been made
  24x7 .
• 1,82,000 girls enrolled in residential schools under Kasturba Gandhi Balika
  Vidyalaya Scheme.

BHARAT NIRMAN

• Bharat Nirman has made impressive progress in 2007-08 with 290 habitations
  provided with drinking water each day, 17 habitations connected through all weather
  road, 52 villages provided telephones, 42 villages electrified & 4,113 rural houses
  completed each day.

For more Click Here -> India Budget 2008-2009 Highlights