'The budget is positive for the oil and gas sector'

---Rama Biyani, analyst - Equity, Pranav Securities

Highlighting the impact of the budget proposal on oil and gas sector, Rama Biyani, analyst -Equity, Pranav Securities says, "All the expectations of the industry and that of the analysts have been more or less met. Subsidy on LPG and kerosene has been reduced to 15% and 33% respectively. Though this led to the increase in LPG cylinder price hike by Rs 40, the decision is good for the sector. Moreover all the product prices are linked to the international prices now. The reduction in excise to 32% from 90% on petrol is another positive thing. But quantitatively, how much effect it is going to have is difficult to say right now. This is because, the industry is undergoing a paradigm shift and now the price will be demand/supply determined.

"The Oil Pool account will be dismantled and the balance will be issued in form of oil bonds to the respective companies. Companies like IOCL who have huge claims though they carry an interest rate of just 7 to 7.5%. The budget is good for the marketing companies like HPCL, BPCL, IBP also.

"But companies like ONGC might be effected negatively due to the increase in the rate of cess applicable to indigenous crude oil under from Rs 900 per metric tonne to Rs 1800 per metric tonne with effect from 1st March 2002".

General Reaction:

"We are still trying to work out the effect of the overall budget. But from a common man's point of view, it is not that good mainly because of the tax proposals. The imposition of 5% surcharge on income tax, reduction in tax rebate in income bracket of Rs 1.5 lakh to Rs 5 lakh is definitely not going to be wellcome by a common individual".

Powered by

YOU MAY ALSO WANT TO READ:
The Rediff Budget Special
The Rediff-Capital Market Budget Analysis
More Budget Stories
Money