Tag: budget 2020

Govt banks on Rs 1.3-lakh-cr rural push to boost growth; analysts pick 10 stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Budget 2020 gave a fiscal stimulus to the economy by allocating more funds towards rural India, reducing taxes, and abolishing Dividend Distribution Tax (DDT) to boost growth.

Against the backdrop of stagnating farm income and rural demand slowdown, the government has budgeted Rs 1.3 lakh crore for agriculture and farmers’ welfare. This includes an allocation to rural employment scheme (NREGS) of Rs 615 bn, rural roads (PMGSY) of Rs 195 bn, and rural housing (PMAY-G) of Rs 275 bn.

“In the Budget, the government has increased allocation towards agriculture & farm welfare by 32% to Rs.1,343 bn. On the other hand, the Food subsidy budget for FY21 has been increased by 6% and the Fertilizer subsidy budget for FY21 has been reduced by 11%,” Rusmik Oza, head of fundamental research at Kotak Securities Ltd told Moneycontrol.

“If we aggregate all the spending by the central government on rural schemes then it is budgeted to go up by just 11% in FY21. This year’s bumper Rabi output coupled with good farm prices should help improve rural income in the short to medium term. This should help improve rural consumption and also help overall GDP growth,” he said.

The steps taken by the government are in the right direction, but it would take some time for the results to show, suggest experts. Recharge of groundwater table, high reservoir levels and ongoing work on irrigation bode well for the next season, too.

“The timing of support from rural to the overall economy wouldn’t have been better. To put some numbers in context, Maruti’s (barometer of economy or auto sector) volume grew 4.2%YoY in FY19 supported by double-digit growth in rural markets (40% share), while urban demand declined,” Aditya Jhawar, Agri Research – Investec India told Moneycontrol.

“However, in FY20 when rural started showing stress the aggregate volumes fell off the cliff for Maruti. Consequently, kick-start of rural consumption is quite important and is expected to support the broader economy,” he said.

Stocks to play the agri space come from the following sectors: tractors, agrochemicals, NBFCs focussed more on the rural space, FMCG companies having higher penetration in the rural areas, select consumer discretionary companies having a rural presence, home appliances, and consumer durables, suggest experts.

This year’s bumper Rabi output coupled with good farm prices should help improve rural income and improve rural consumption and also help overall GDP growth.

We believe that the rural stress would ease out in 2020 due to a combination of policy action accompanied by better realization for agri produce to farmers. For the Rabi crop, the sowing acreage is higher by record 9.5% and the prices of certain agri commodities have been moving up steadily in the past few months especially coffee, palm oil, cotton, pulse to name a few,” Gaurav Dua, Sr VP, Head – Capital market Strategy & Investments told Moneycontrol.

“This would aid growth in farm income this year. The Union Budget has also proposed certain beneficial measures; however, the policy measures can take time to reflect and the benefits will be more visible by next year in 2021,” he said.

We have collated a list of stocks from various analysts that stand to benefit the most from the expenditure done towards rural India:

Expert: Aditya Jhawar, Agri Research – Investec India

Rallis India:

Rallis India is our top pick in the domestic Agro Chemicals space. Rallis’s encouraging performance of both domestic (54% share) and export businesses (46% share) drove a robust revenue growth of 28 percent YoY in Q3FY20.

Although, its renewed strategy has set Rallis’ outperformance vs peers on track, supply-side issues from China had taken a toll on margins, and consequently, earnings, until Q3FY20.

Despite the recent run-up in Rallis’ share price of over 30 percent in the last 1 month, valuation at 17x/14x FY21/ FY22E EPS (vs. 5-year avg. of 20x) is attractive considering strong EPS growth of 21% CAGR over FY20-22E (vs -6% over FY17-19).

Expert: Gaurav Dua, Sr VP, Head – Capital market Strategy & Investments.

Vision to double farm income is one of the priority areas for the NDA government and it reflects in the policy announcements. However, there are external factors like prices of agri commodities, weather conditions among others that can cause delays the set time period to achieve the target of doubling of farm incomes.

From agri space, we like PI Industries, Insecticide India along with other rural economy based companies like Mahindra & Mahindra, Dabur India, Relaxo Footwear, Spandana Spoorthy.

PI Industries:

The Budget propose to allocate Rs. 2,83,000 crore for farm, irrigation and rural development and agri-credit target for FY21 set at Rs. 15 lakh crore. Also to expand integrated farming systems in rain-fed areas.

Insecticides India:

To promote /incentivise the use of organic fertilisers instead of excessive use of chemical fertilisers. The move will benefit players like Insecticides India, PI Industries, Aarti Industries, Atul an SRF.

Relaxo Footwear:

Customs duty on footwear increased from 25 percent to 35 percent. The increase in customs duty would affect the import of footwear, thus benefitting footwear companies in India such as Bata India and Relaxo Footwears.

Dabur India:

Dabur posted decent operating performance in Q3FY2020 with steady volume growth of mid-single-digit and market share gains in key categories. We have fine-tuned our earnings estimates to factor in slow recovery in the demand environment.Dabur has maintained its thrust on innovations and expansion in distribution reach to gain market share in its key categories. The stock is currently trading at 43.4x its FY2021E earnings.
Spandana Spoorthy:

Spandana Spoorthy Financial Limited (SSFL) is a leading, rural-focused NBFC-MFI with a geographically diversified presence in India. It has a pan India presence across 17 states. The company offers income generation loans under the joint liability group model (JLG), predominantly to women from low-income households in Rural Areas.

Spandana Sphoorty Financial Ltd (SSFL) has reported strong CAGR growth in AUM (~85%), Networth (~43%) and PBT (~200+%) over FY17-FY19 period indicating a strong growth momentum. Over the years, SSFL had built upon expanding its access to funds/capital, even while maintaining an improving rating profile and a conservative Asset quality book and leverage.

Expert: Rusmik Oza, head of fundamental research at Kotak Securities Ltd

Escorts & M&M:

We like Escorts and M&M (companies are expecting demand for tractors to be better in FY21 as compared to FY20). Colgate Palmolive in the FMCG space as valuations are undemanding considering the likely RoE of >60% in FY21.

M&M Financial:

M&M Financial in the NBFC space as it the expertise in lending to rural customers. We don’t see meaningful upside in agrochemical stocks as most of them have rallied and most consumer durable & discretionary companies are trading at extremely rich valuations.

Expert: Deepak Jasani, Head of Retail Research, HDFC Securities.

Coromandel International:

Agriculture and allied activities, Irrigation and Rural Development – an allocation of about Rs2.83 lakh crore have been made for the year 2020-21. It is positive for seed, fertilizer and agrochemical manufacturers like Coromandel.

For pushing the rural consumption, what is more important is the outcome of the rabi crop, monsoon spread and intensity and the Kharif output. Currently, the expectation on these counts is good.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Planning a foreign tour this year? Do it before April 1 to pay less tax

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Planning a foreign tour or wish to send any foreign remittance over Rs 7 lakh this year? Do it before April 1 in order to avert paying an additional 5 percent as TCS (tax collected at source), say financial analysts.

In a recent move, the Union government has proposed to impose a 5 percent tax on foreign travel packages bought from tour operators with effect from April 1, 2020. Further, 5 percent tax will be levied on remittances over Rs 7 lakh under the liberalised remittance scheme (LRS), the 2020 Union budget has proposed.

The current rule

Currently, LRS of the Reserve Bank of India (RBI) allows resident individuals to remit a certain amount of money during a financial year to another country for investment or expenditure. Under this scheme, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

The proposed rule

In the 2020 Union budget, the government proposed TCS on foreign remittance and sale of overseas tour packages over a threshold. On foreign travel packages, tour operators will be liable to levy additional charge as TCS when the package is bought. If PAN or Aadhaar is not produced by the buyer, the TCS will be charged at 10 percent, which will otherwise be 5 percent.

What experts say

The new provisions will result in more funding requirements. Also, it will augment the compliance requirements for those responsible for deducting and depositing TCS, say experts.

You should book your tour and front load remittances by March 31, 2020 to save the additional cash outflow.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

New income tax regime: Why is it still important to invest in financial products?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Budget 2020 offered an individual the choice of paying tax under the new structure with lower rates by foregoing deductions or continue paying tax under the existing tax regime by claiming the applicable exemptions. After analysing the benefits, many investors may switch to the new tax structure. But does this mean that such investors should stop thinking about investments at all?

(Also read: 5 reasons why your income tax refund gets delayed and how to handle it )

What experts say on investments

According to experts, investments are necessary not just to avail tax deductions, but rather to meet the long-standing financial needs. Stopping investments, despite the fact that the individual picks up the new regime or the old one, is not a good idea.

Investments should be done, even if the new tax structure suits the individual, experts suggest. There are several investment avenues available in the market that helps one in creating a corpus for a long term goal.

(Also read: Will ELSS lose significance under the new income tax regime? )

How to plan investments

“An individual should take a step-up approach for investments. It is safe to assume that one should start with at least 10 to 15 percentage of the investible surplus for retirement planning at a young age. With passing years the allocation has to be topped up,” said Dinesh Rohira, Founder, 5nance – an online financial planning and management platform. This is irrespective of the fact which tax regime is chosen.

“One should base the investments on the time factor. Equities always yield better results on a longer time frame. Allocation of fund should be balanced between equity and debt instruments,” explained Rohira.

According to Sachin Karnik, Vice President, Finance, ITM Group of Institutions, an individual should never compromise on term Insurance.

“Term insurance is popular primarily because it asks for low premiums, yet the family of the deceased gets the entire amount. Health insurance is also important for one to keep as it provides with a much needed financial backup at times of medical emergencies,” he said.

Mutual funds, bank deposits, public provident fund, national pension system and government bonds are other investment products that help in generating funds.

Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sabka Vishwas scheme: Taxman set to garner Rs 39,000 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In what can be a windfall gain to help shore up tax collections for the government, Central Board of Indirect Taxes and Customs (CBIC) is aiming to fetch Rs 39,000-40,000 crore from settling legacy disputes under the Sabka Vishwas scheme​.

People in the know have indicated to CNBC-TV18 that CBIC is now getting in touch with the top corporates and other taxpayers to clear these tax dues at the earliest to meet tax collection targets.

Government officials told CNBC-TV18, “CBIC could garner Rs 5,000 crore from top-200 taxpayers willing to settle their claims. The government is trying to get the entire amount of settlement before March 31, so that the funds can be calculated for the current financial year itself, which will help the government meet the revised targets.”

The Sabka Vishwas scheme has seen 1.89 lakh applications including small and large tax dispute amounts.

“The majority of taxpayers have committed to settling their disputes and are paying in the range of below Rs 100 crore, each. CBIC estimates to get Rs.39,000-40,000 crore,” officials added.

Finance minister Nirmala Sitharaman had announced the scheme in Budget 2019-20 and offered a complete waiver on interest and penalty and provided immunity from prosecution.

According to the contours of the scheme, any taxpayer applying under the scheme is required to pay the principal amount if they made a voluntary disclosure of tax dues. For cases that are under adjudication or appeal, the scheme offers a 70 percent relief on tax demand of up to Rs 50 lakh. For tax demand above Rs 50 lakh, the relief was 50 percent.

The scheme kicked off in September and ended on January 15. After applying under the scheme, the taxpayers get a maximum of 90 days to clear the tax dues, as per the proposed settlement.

Here is a comprehensive list of top 15 taxpayers, who have committed to settling their legacy disputes and will now have to pay a final amount as per the contours of the scheme.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SBI chief Rajnish Kumar says expect pick-up in demand from the corporate sector

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India’s (RBI) Monetary Policy Committee in its February meeting kept repo rates unchanged, but on display was the gamut of liquidity tools. In fact, many have presented the argument that the RBI presented a rate cut without actually cutting rates. Rajnish Kumar, chairman of the State Bank of India, in an interview with CNBC-TV18 said that there will be a pick up in demand in the corporate sector.

“There are couple of innovations this time in the monetary policy. One is long term repo (LTRO), one year and three year. Second is about lending to auto, MSME [micro, small and medium enterprises] and residential housing. So whatever is the incremental lending over January 31 that will be exempted from CRR requirement. There are couple of other things about the cheque truncation system across the country, which is a big convenience for the customers. Principally these three apart from whatever other things are there in the monetary policy.”

About the non-performing assets (NPAs) in Micro Units Development and Refinance Agency [Mudra] loans, Kumar said that digitisation of data will improve the quality of lending.

“Earlier there was a higher NPA but three months back for loans upto Rs 50,000 and for now loans up to Rs 1,00,000, SBI has done end-to-end digitization. Although, it is early because there is a 3-months moratorium built in, we are watching the portfolio. But early signs are very encouraging that the revised system that we have put into SBI for e-mudra loans, which is a completely digitized process, it will improve the quality of lending through e-mudra loans.”

On the matter of agriculture loan waivers announced by various state governments, Kumar said that the SBI has requested the Reserve Bank of India for clarification on its guidelines.

“We have requested RBI that the guidelines can be clearer because there are some confusions around the instructions. So, we are hoping there will be more clarity on the guidelines. Otherwise, in certain states the recovery record at the renewal of these loans have been impacted.

“Wherever there is a debt-waiver announcement, the quality of the agriculture portfolio deteriorates. There are statistics to prove that point. So, that is the impact that we have felt.”

Kumar expressed hope for a pick up in demand from the corporate sector. “We are hoping that there are lot of sanctions, lot of disbursements in the pipeline but on the corporate side, utilisation of working capital as well as the sanction remains.

“There is some time left but I am very confident — you would say four months ago also you were very confident — but there will be pick-up in demand from the corporate sector and once the demand picks up then year-on-year growth numbers will start looking much better than what they are currently.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

FM Sitharaman says laid foundation for $5 trillion economy in budget

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Union finance minister Nirmala Sitharaman on Sunday said that the government, in the 2020 budget, has laid the foundation of increasing consumption while ensuring that the government’s investment is deployed to build infrastructure leading to a $5 trillion economy by 2024-25.

She also pitched for rationalisation of GST rates once a year and not every three months as was the trend so far.

“I think we have laid the foundation for increasing consumption, ensuring that capex (capital expenditure) and government’s investments will go towards spending on building of assets in infrastructure which should have cascading effects both in the short term and in the long term,” Sitharaman told reporters.

She said, “In order to address rural distress, 16 focused action points have been announced in the budget. So I expect all this will lead to a five trillion dollar economy.”

Asked about what West Bengal has received from the budget, she said, “I do not know how I answer this question of ‘kisko kya mila’ (which state gets what). I am looking at the point of macroeconomic stability, building assets in the country, money directly going to hands of individuals because of reduced tax rates and so on.”

Announcements were made in the budget about various projects which are happening in different states, the finance minister said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nirmala Sitharaman says govt using data analytics to plug loopholes in GST

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Union finance minister Nirmala Sitharaman on Saturday said the central government is plugging the loopholes in the Good and Services Tax (GST) with the use of technology and is working towards eight percent growth rate.

She also said micro, small and medium enterprises (MSMEs) can make a complaint if banks deny them loans without reason. Sitharaman was in Chennai to explain the budget proposals to traders, industrialists, economists and the media.

According to her, during the last three months, the GST collections have exceeded Rs 1 lakh crore. She said at the GST Council, state finance ministers had said that owing to loopholes tax revenue is not increasing and now that is being plugged.

The GST collections during November and December 2019 were about Rs 1,04,000 crore and Rs 1,03,000 crore respectively and in January it was Rs 1,11,000 crore, said Ajay Bhushan Pandey, Revenue Secretary.

According to Pandey, the government is taking various measures like the use of data analytics, data from Income Tax filings, exports and imports and identify where taxes are not being paid.

Pointing out that there are about 1.20 crore entities registered under GST, he said red flag reports are prepared every month and SMS messages are sent to those on whom red flag reports are made.

Pandey said if the tax paid and the tax due difference is large than the taxpayers and also tax officials are notified. “This has resulted in higher tax collections,” he said.

According to him, the government will continue to use a targeted approach and also use data analytics and artificial intelligence. When asked about the pending GST dues of Rs 4,000 crore to Tamil Nadu, Sitharaman said it would be setting in two months and the due is not targeted at the state alone.

On bringing petrol and diesel under GST regime she said the GST Council consisting of state Finance Ministers have to decide on that and once they agree then it would be done.

Pandey also said once the Finance Bill is passed by Parliament the government will put out the procedure to be followed under ‘Viwad Se Vishwas’ scheme for settling pending direct tax issues.

He also said where the tax department of the government has filed an appeal against the taxpayer then that would be withdrawn.

Queried about the new tax slab rates that would turn India from a saving economy to spending economy, Sitharaman said that an earning individual with additional money on his hands can decide what to do with it and the government need not guide his savings through tax deductions.

According to her, it is just eight days since the Budget for 2020-21 was presented. It will take some time to see whether demand boosting measures stated in the Budget would give results.

Earlier addressing the traders and industrialists, Sitharaman said micro, small and medium enterprises (MSMEs) can complain if banks deny them loans without reason.

Sitharaman said if the banks are denying loans without reason then the MSMEs can send a complaint to the special centre to be announced shortly.

She said a copy of the complaint should also be sent to the concerned bank manager. Sitharaman said the foreign exchange reserves are at a high level as the fundamentals are good.

On her long Budget speech, Sitharaman said that officials had worked hard to come out with proposals for all sections of society.

Stressing that the macroeconomic fundamentals are good Sitharaman said the focus is on creating assets and investing in infrastructure.

Earlier banks resorted to “phone banking for loan disbursal” lending to “uncles and brother-in-laws” which resulted in high non-performing assets (NPAs). “It took four years for us to set right the NPAs,” she said.

Sitharaman said lessons have been learnt on how to prevent such a situation again. She said the government has not resorted to useless spending. The government has decided to create assets investing in infrastructure. She said public expenditure should go for infrastructure.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Money Money Money Podcast: Budget 2020 and impact on your personal finance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The union finance minister Nirmala Sitharaman has announced a new tax regime. Should you stick to the old structure or move to the new one? Are ULIPs more attractive than mutual funds now? How does the budget impact NRIs?

CNBC-TV18 answer all your questions in this special episode of Budget & You. We are joined by Archit Gupta, founder and chief executive officer of ClearTax and Rajiv Bajaj, chairman and managing director of Bajaj Capital, to answer these questions?

Listen to the full story in our latest podcast:

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2020: DPIIT to take up ESOPS taxation relief with Finance Ministry

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Department for Promotion of Industry and Internal Trade (DPIIT) is pushing for ESOP taxation relief that startups have been asking for and which was addressed with a limited scope in Budget 2020.

People in the know of developments have told CNBC-TV18 that DPIIT has held discussions with the Income Tax Department on expanding the scope of relief announced in the Budget to all startups recognised under Startup India.

DPIIT is also engaging with startups and industry bodies on the demand for removal of double taxation on ESOPs and is expected to make a recommendation on that as well.

In her budget speech, Finance Minister Nirmala Sitharaman announced that the taxation on ESOPs for employees would be deferred from the time of exercise to up to five years or till they leave the company or when they sell their shares, whichever is earlier.

But the Finance Bill mentioned that this applies to employees with startups eligible Section 80-IAC, under which startups have to get a certificate from an inter-ministerial board.

This, industry members said,  will leave out a large section of the startup economy from the jurisdiction of the new rules. While there are over 28,000 startups recognised by the DPIIT, the number of startups certified by an inter-ministerial board are far fewer at about 200, as per industry members.

Startups were also hoping for a removal of double taxation and wanted ESOPs to be taxed only at the time of sale. This, however, has not changed, with the finance minister only announcing a deferment of the taxation from the time of exercise.

DPIIT secretary  Guruprasad Mohapatra had told CNBC-TV18 post the Budget that the department will engage with startups and finance ministry on employee stock ownership plan (ESOPs) issue.

“Now, there is an issue (ESOP) raised that could be expanded to cover startups that do not exactly fulfill this particular section of the Income Tax Act requirement. So, this definitely will require a relook at the issue. Definitely we are not averse to re-looking at the issue and we will be discussing this,” he said on February 3. 

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow