5 sectors affected by the union budget

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Sectors affected by the Union Budget 5

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Page 1: 5 Sectors affected by the Union Budget

Sectors

affected by the

Union Budget 5

Page 2: 5 Sectors affected by the Union Budget

The finance minister presents his

budget in 2 parts:

Broad Policy

Tax Proposals

Page 3: 5 Sectors affected by the Union Budget

Broad Policy

Policy initiatives indicate the

stance of the budget. If the

budget is allocating resources

for spending on infrastructure, a

lot of related businesses are

affected.

Page 4: 5 Sectors affected by the Union Budget

Tax Proposals

Similarly, when tax rates or

duties are changed, they

affect individuals or

companies accordingly. The

ability of these companies to

pass on changes in tax rates

to customers determines

their future profitability.

Page 5: 5 Sectors affected by the Union Budget

The Sectors

Here are some sectors that have been impacted, more often than not, by

past budgets:

Power

Real Estate

Infrastructure

Automobiles

Oil and Gas

Page 6: 5 Sectors affected by the Union Budget

#1 Power

Page 7: 5 Sectors affected by the Union Budget

Power

• Power production requires fuel. Any changes in taxes on fuel could

make or break a project.

• Similarly, excise and customs duties on power equipment also affect

the power sector.

• Free power supply to farmers in many states puts state electricity

boards at a disadvantage.

Page 8: 5 Sectors affected by the Union Budget

#2 Real Estate

Page 9: 5 Sectors affected by the Union Budget

Real Estate

• Low-cost housing and urbanization influences the real estate sector.

The budget is watched very closely for incentives offered towards this.

• Successive governments have always focused on low cost and

affordable housing for the masses and hence, have normally announced

schemes to help the sector.

Page 10: 5 Sectors affected by the Union Budget

#3 Infrastructure

Page 11: 5 Sectors affected by the Union Budget

Infrastructure

• This is perhaps the most affected sector in the budget.

• The government spending on rural and urban infrastructure leads to a

significant business for companies that build it.

• The finance minister announces allocation to rural and urban

infrastructure and to build roads, bridges, metro train and transport,

airports in the budget.

Page 12: 5 Sectors affected by the Union Budget

#4 Automobile

Page 13: 5 Sectors affected by the Union Budget

Automobile

• Excise duty on manufacturing of cars in India changes in every other

budget.

• While the duty on vehicles with smaller engines is less, it is more on

vehicles that have a powerful engine. The differentiation is also based

on the length of the vehicle (passenger vehicles). For high-end vehicles,

there is customs duty on parts imported and assembled in India.

• The consumer decision to buy or sell vehicles is influenced by taxes

announced in the budget.

Page 14: 5 Sectors affected by the Union Budget

#5 Oil and Gas

Page 15: 5 Sectors affected by the Union Budget

Oil and Gas

• Petroleum subsidies keep prices of diesel, kerosene or LPG low.

• Since fuel prices to retail customers and profitability of companies are

determined by the amount of subsidies, investors listen to the finance

minister’s budget speech for a stance on fuel pricing going ahead.

• The companies which are most impacted are the state-owned oil

marketing companies that sell diesel and LPG to consumers as well as

the upstream companies which have to bear a part of the subsidies.

• India spends about 0.6% of its GDP on fuel subsidies.

Page 16: 5 Sectors affected by the Union Budget

Final note

• Subsidies form a significant chunk of the Government’s expenditure.

Any cut in subsidies is good news for the relevant companies and

hence, for the investors.

• In a nutshell, the five sectors listed above affect shareholders and

consumers alike. Budget is an important event that determines future

pricing of products and services sold in these sectors.

• To learn more about the union budget, click here.

Page 18: 5 Sectors affected by the Union Budget

Disclaimer:

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In case you wish to escalate your concern / query, please write to us

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Investments in securities are subject to market risk; please read the SEBI prescribed

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The content/illustrations shared in the presentation is based on information available from

the past budget(s)