Mr. Saurav Arora, Sr. Vice President – Jaypee Capital Services

The Union Budget, the biggest annual policy event assumes great significance because of its vital importance in determining the future pace of the economy. The budget may largely revolve around the reintroduction of the fiscal measures; while also ensuring that the demand buoyancy in the economy is maintained. In view of the commodities market, we expect the government to take some steps on the FCRA amendment, which will provide autonomy to the Commodity Futures Market Regulator putting it on par with its capital markets counterpart, SEBI. A stronger regulatory framework will enable institutional investors to participate in commodities futures trading. With this bill, the commodity houses will then be able to offer hedging instruments like options contracts and thereby improve liquidity and turnover. This will also make trading more flexible for farmers and bring about better price transparency for all participants. Securities Transaction Tax (STT) is another aspect of the budget that will attract attention. The government should abolish STT in the upcoming Union Budget. Considering that STT is a cost to traders and arbitrageurs, its abolition will lead to an improvement in trading volume on the exchanges. This will help increase the liquidity and depth of the Indian stock market. Also higher volumes will benefit the brokerage industry as well. There also needs to be a clear cut definition for long term capital gains versus business income emanating from stock market transactions. We also expect the budget to revolve around various issues like: 1. The government should roll back service tax to 12% from the existing 10% which was provided as part of the stimulus to the economy. 2. We expect excise duty to be rolled back for certain sectors from the existing 8% to 10% as part of the withdrawal of the stimulus.3. We expect the government of to announce a clear roadmap on divestment an also target amount which they intend to raise.4. The government is expected to announce a clear roadmap for implementation of GST with timelines.5. We expect the government to announce a clear roadmap on the 3G auction as it would help the government improve its fiscal situation.
Mr. Saurav Arora