India Policy and Reforms share price target

After many years of debate and consultations between political parties, the GST bill has finally been clearedbytheupperhouse(RajyaSabha).Whilethebillhasbeenconstitutionallyclearedandwillbe implemented sometime in FY18 (central government's guideline is April 2017), its actual impact on corporates,consumers,andtheeconomycannotbegaugeduntilthecentralgovernmentfinalisesthe GST rate. Assuming a revenueneutral GST rate of 18% (as recommended by the Chief Economic Advisor), the GST implementation would result in higher services inflation (CPI) and would have no impactonGDPandfiscaldeficitinFY18.However,itcouldhaveapositiveimpactonGDPandfiscalin thenext34years.CompanieswilltakeafewquarterstounderstandtheGSTmechanismandevaluate...

GST brief: The much awaited Goods and Service Tax (GST) subsumes multiple indirect taxes such as excise duty, service tax (central level), Value Added Tax (VAT) along with local taxes (eg. octroi). Under the old regime, companies were subject to a maze of taxes at the central, state & city level that varied substantially from state to state and at different stages of the product cycle (production, distribution, sales). The sheer complexity involved in ascertaining different taxable values/classification standards etc has resulted in large compliance costs, high consumption...

The Reserve Bank of India (RBI) maintained status quo on key policy rates in its Monetary Policy review today, which is along expected lines. The central bank has however stated that it would continue to maintain an accommodative policy stance while being cautious on inflation. It targets to contain Consumer Price Index (CPI) based inflation below the 5% mark by March 2017. The central bank also said that it will shortly finalize the methodology for determining the base rate which would be based on marginal cost of funds, which all banks will have to comply with. This could have a short-term negative impact on the net interest margins of banks in the coming quarters.

In Budget 2015-16, the Finance Minister announced the merger of the Securities Exchange Board of India (SEBI) and the Forward Markets Commission (FMC). As highlighted earlier, this move clearly shows that that the government intends to develop the commodity derivatives market in keeping with global standards.

We organized investor interactions with the senior management of MCX. The management highlighted several potential regulatory tailwinds including (1) rationalization of the commodities transaction tax (CTT) (2) merger of the Securities Exchange Bureau of India (SEBI) and the Forward Markets Commission (FMC).