From the category archives:

India

India Property Weekly (05 March 2010)

5 March 2010

Confusion on Service Tax (ST) levy on construction: Although the aim is to discourage speculation and encourage the sale of ready flats, developers see this as pushing up prices 3-4%. Other ST provisions rolled out in property: 1) “Activity of renting itself is a taxable service”, levies a 10% ST on it (circumvents Delhi HC ruling in Apr09); 2) ST levied on rent of vacant land leased for business/commercial; 3) premium services like higher floors, preferential views to be subject to ST. Implications for sector? 1) ST being passed on to tenants/customers will be dependent on demand-supply, 2) higher impact of ST seen on affordable housing (could impact volumes)

Indian Auto Feb Sales: Volumes Moderate Sequentially, Buoyed by Base Effect

3 March 2010

Overall Y/Y growth was strong for the majors, a combination of base effect + some pre buying before the budget and that offtake in Feb09 had been lackluster. Full extent of budget impact (2% hike in prices to offset excise increase) will be reflected in March offtake. Sequentially, volume trends were sedate – growth was either flat or negative for most players.

India Budget FY11 – Positive Moves Towards Fiscal Consolidation

2 March 2010

While Budget FY11 was always going to be a difficult act, we view it is well balanced: (a) The 5.5% deficit number is as per consensus and is realistic; (b) There is a clear direction towards fiscal consolidation and it is quantified (4.8% in FY12, 4.1% in FY13), and (c) There are steps towards structural reform as reflected in: (i) Revised revenue sharing norms between centre and states, (ii) Subsidies streamlined, and (iii) Hard time frame for implementation of Goods & Services Tax and Direct Tax Code.

India Property Weekly (01 Mar 2010)

1 March 2010

HDFC Chairman Mr Parekh sees a lopsided recovery within the sector – resi prices in Mumbai and Central Delhi are rising, unlike Pune and Hyderabad; commercial cap values/rentals are yet to recover. He believes builders cannot hold onto housing inventory for long and hence does not foresee a sharp surge in resi prices. Mr Parekh believes banks restructuring realty loans wasn’t a wrong move; but restructuring debt on completed projects is wrong.

India: Rail Budget for 2010; Announces Ambitious Vision Plan for the Decade

25 February 2010

Citing the need to support growth, the rail budget presented today: (1) maintained status quo on passenger fares/freight tariffs, (2) announced a token reduction of Rs100/wagon in freight charges for foodgrains and kerosene, and (3) lowered service charges on e-ticketing; The Ministry also laid out an ambitious vision plan for the coming decade.

India: Spotlight on Fertilizer Subsidies…A Step Towards Fiscal Reform

23 February 2010

Last week’s Cabinet decision on the fertilizer front where the government (1) finally approved the implementation of a Nutrient Based Pricing Policy, and (2) raised retail prices of urea by 10% is a step towards fiscal consolidation. Although the measures have been on the agenda for a while (nutrient based policy was proposed last year, urea prices had been unchanged since 2002), they come close on the heels of Kirit Parikh Committee recommendations on fuel subsidies, and could prompt moves for a similar decontrol in fuel prices.

India Banking Bits (22 Feb 2010)

22 February 2010

HDBK raises the FD rates across nine maturities by 25-150 bps; SBI chairman reportedly mentions that it is unlikely to raise deposit rates before May / June as it is flush with liquidity – at the end of 3QFY10, the bank had a liquidity overhang of Rs750b; According to money market sources, PSBs have been actively selling shorter tenure securities from their HTM portfolio in a sign of preparation for big losses in their bond portfolios; RBI reduces the ceiling rate on export credit by banks to LIBOR + 200 bps from LIBOR + 350 bps on fresh advances.

India Oil & Gas Daily (22 Feb 2010)

22 February 2010

Budget could lay road map for petroleum decontrol; Oil sector pushes for rationalisation of duties; RIL produces gas worth US$1.5 bn from D6 fields; NTPC triples KG-D6 gas offtake from RIL; Govt dilemma easier to handle if Parikh report is accepted; SIAM to launch project for greener fuel tech soon; SC issues notice to RIL, Essar on petro board’s powers to fix fuel prices; Cairn gets govt nod for new delivery points; D-6 block: Reliance plans multi-well appraisal programme in 2010; Cairn set to implement EOR trial in Mangala; drilling in two months; Great Offshore to raise Rs 17.5bn; ONGC discovers oil and gas in Gujarat; IGL lines up Rs 20bn capex for 3 yrs; Royal Dutch liabilities to pare Essar cash outgo; RIL fully cooperating with audit: CAG; Lanka IOC kept tap running by RIL supply; HPCL to focus on rural retail business.

India: What Do We Expect from Budget F2011?

21 February 2010

The budget for F2011 (12 months ending March 2011) will be announced by the Finance Minister on February 26. We think the budget for F2011 could focus on the following themes: a) roadmap for implementation of the Goods and Services Tax system; b) clear plan to improve health of public finances; c) confirm its plan to initiate meaningful steps toward divestment of the government’s stakes in SOEs; d) acceleration in infrastructure spending, particularly in roads and power; e) direct tax reforms, and f) social/rural sector push. In addition, we expect the government to hike excise duty rates by two percentage points on almost all products and announce other tax measures in the February 2010 budget. Overall, we expect the central government deficit to reduce to 5.5% of GDP in F2011 from 6.8% in F2010. We expect further reduction in the deficit to 4.6% of GDP in F2012.

India Property Weekly (19 Feb 2010)

20 February 2010

Major News: IBREL contemplates reorganizing its wholesale trading biz, looking to invest in 100% subs; HDIL adds new slum rehab project in Santacruz, Mumbai; RBI looking to put a stop to further restructuring of realty loans; PVR-DLF cinema buyout deal called off; Jet may sell Mumbai BKC land to Godrej Properties for Rs4.5 bn; Shriram Properties raises Rs400m from ICICI Prudential AMC & India Opportunities RE Fund for its 16-acre residential project in North Bangalore

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