Will the Finance Minister Hint at Reforms ?

Government as growth biased and one of the key premise of positive outlook on India is the restoration of Indian GDP growth to an 8-9% trajectory over next 12 to 15 months. The Indian parliament’s agenda for the current budget session (apart from discussing the union budget) seems to signal a strong intent to move ahead on the long outstanding reform agenda. The agenda includes 16 pending bills for consideration and passing (of these 10 to be taken up only in case standing committee reports are presented in time), and introduction of 63 new bills. (more…)

Railway Budget 2010 – Key Takeaways

Citing the need to support growth, the rail budget presented today: maintained status quo on passenger fares/freight tariffs, announced a token reduction of Rs100/wagon in freight charges for foodgrains and kerosene, and lowered service charges on e-ticketing.

The budget has targeted a 6% increase in freight loading to 944mt in FY11. Initiatives announced to help achieve this include (more…)

Markets Discounting Budget Views – Any Surprises ?

The Indian Markets have corrected pre-budget and are discounting the expectations that are likely to be met and reforms continuing without any drastic changes. BOFA-Merrill equity analysts write,

We think the budget to be presented on Feb 26th is unlikely to change the range-bound market view that we
have. We think the impact of the budget on the markets has been waning over the years since (more…)

Impact of Fertilizer Policy Change

The cabinet approved the following changes to fertilizer policy that will be operational from April 2010. These changes will reduce the govt’s subsidy burden.

The govt. has proposed a 10% hike in farm-gate prices of urea to ~INR5,310 from ~INR4,830 per ton currently. This will likely reduce the overall fertilizer subsidy burden by ~INR13bn in FY11. However, the earnings impact for urea companies will be minimal, given realization for them will not likely change. Moreover, as per our economist Indranil Sen Gupta, the urea price hike will increase inflation by 25bps. (more…)

Bharti-Zain deal – Weak Signals for Airtel

Bharti Airtel management confirmed that it is in exclusive talks with Zain for buying the African assets of Zain (15 countries excluding Sudan & Morocco) for US$10.7b. Bharti and Zain are likely to be in exclusive talks till March 25, 2010. Bharti’s Zain acquisition is likely to lead to weakness in Bharti’s share price in the short term. (more…)

Current State + Future Outlook of Banking in India

JP Morgan hosted a Conference with 11 financial institutions and here is an excerpt from the same.

Rise in Credit Demand – Credit demand is slowly improving, driven by higher sanctions in infrastructure, along with mortgage and auto loans. Expectations are for ~15-16% credit growth for FY10 and ~20% in FY11. Increased credit offtake should not impact lending rates. (more…)

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