Stimulus Package; wider coverage but limited impact: Angel

Angel Broking has come out with its report on third stimulus package. The government announced a 2% cut in Excise Duty and Service Tax rate with the intention of boosting consumer demand and providing some relief to the industry reeling under the impact of slowdown.

Angel Broking’s report on Stimulus Package III:

Angel Broking has come out with its report on third stimulus package. The government announced a 2% cut in Excise Duty and Service Tax rate with the intention of boosting consumer demand and providing some relief to the industry reeling under the impact of slowdown. While the general Excise Duty has been reduced from 10% to 8%, the rate of Service Tax has been cut from 12% to 10%. Also, the 4% Excise Duty cut announced earlier in the stimulus package in December 2008 will now continue beyond March 31, 2009.

We believe the tax rate cut is a welcome relief for the manufacturing and the services sectors of the economy, which are witnessing challenging times. These two segments of the Indian economy combined contribute to almost 80% of the country’s GDP.

As far as the cut in Excise Duty is concerned, the impact will be felt on only those sectors/products that are at the 10% Excise Duty rate slab. Amongst the sectors under our coverage, Cement, Metals, Infrastructure & Real Estate and Automobiles are primarily affected by the current move.

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