Budget Impact
on Agriculture and Auto Sector
We had
discussed main points of budget 2014-15 in our earlier blog. Now we are going
to discuss its impact on important sectors. First we will take about budget
impact Agriculture sector.
Agriculture
Sector:
The finance minister has affirmed to
achieve 4% growth in agriculture which is good for the sector. In our country,
majority of population is still depends on agriculture. It is very essential to
grow agriculture for nation’s economic health. In 2014-15, the total
agriculture credit has been set to Rs 8 lakh crore. NABARD will target 5 lakh
farmers through financing.
Under the Interest Subvention Scheme
for short term crop loans, the banks are extending loans to farmers at a
concessional rate of 7%. The farmers get a further incentive of 3% for timely
repayment. This Scheme will be continued in 2014-15. Price stabilization fund
of Rs 500 cr would be made to keep food prices in check. It is positive for
food price management.
Overall tone of the budget was
favorable for the agri sector however there is nothing specific for any related
companies.
Auto Sector:
The extension of excise duty cut which
has been announced on 30th June 2014 will continue till 31st December 2014.
This is expected to result in pick up in demand for the overall sector. Increase
in tax exemption limit from Rs 2 lakh to Rs 2.5 lakh will lead to increase in
disposable income and thereby boost demand for automobiles. A manufacturing
company that invests more than Rs 25 crore in any year in new plant and
machinery would get investment allowance at the rate of 15%. The benefit would be available for three
years for investments upto 31.03.2017.
Overall efforts have been made to
revive the demand for automobile sector; though nothing specific has been
announced. An increase in disposable income and focus on rural spending is
likely to result in some pickup in demand for the overall sector. Investor can
buy Escorts with price target of Rs 156.
If you want more information
regarding investment or you have any other query about investment feel free to
ask us.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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