India's savings rate has declined substantially from the highs of around 37 per cent to barely 30 per cent in the last few years. This is visible in the faltering deposit growth and high interest rates of banks.

Simultaneously, savings in physical assets like gold and property have increased. On the one hand, the country needs to lower gold imports to improve the precarious current account deficit.

We need to increase our savings and investments in order to revive GDP growth. Hence, from several angles it would be appropriate for the budget to try and encourage financial savings and discourage savings in gold.

Possible ways to do this would be to increase the limit for tax deductions in respect of financial investments such as ELSS, equities and bank deposits. Also, banks may be allowed to issue tax-free infra bonds.

Let's look at various sectors which could be impacted by the upcoming Budget 2013:

Banking

In general, the budget also always holds importance for banks from the point of view of the credible fiscal deficit implications and corresponding implications for market borrowings by the government.

If, as expected by us, the budget this time around indeed credibly projects a lower fiscal deficit and market borrowing programme, then it would be positive for banks from the point of view of lower government bond yields and interest rates.

Secondly, coinciding with the budget, some clarity is possible in coming days on the issue of new bank licenses, wherein if corporates are allowed, which is increasingly appearing likely, that would be a game-changing event for the banking sector.

The FM may use the occasion of the budget to provide greater clarity on the likelihood and implications on the economy of large capital investments in the banking sector by corporates.

Steel

The steel industry is reeling under pressure due to scarcity of raw materials. Hence, the industry would wish the government to take measures for speedy forest and environment clearance.

Also, the industry would benefit if the railways expand capacity so that higher rates are available for metal/ore transportation, given that transportation costs by roadways is getting expensive, especially with diesel prices expected to go up over the coming 2 years.

Oil & Gas

Upstream and downstream companies would welcome a concrete subsidy-sharing formula for sharing under-recoveries. Also, increase in gas prices would incentivize oil and gas majors to undertake new exploration to increase gas production in the country.

IT sector

The Union Budget 2012-13 is likely to be a non-event for the Indian IT sector as the wish list remains extremely small. In the last budget, MAT was continued on SEZ units.

As per media reports, industry body NASSCOM's wish list includes removal of MAT on SEZ units. However, we do not expect any material change to the current tax structures. The budget can clarify issues related to dual levy of VAT and service tax on licensing of software.

In addition, the Indian government has started focusing on e-governance lately, with its various initiatives such as RAPDRP, UIDAI and Sarva Shiksha Abhiyan. This is also a space to look out for if the government decides on increasing the outlay related to these schemes to move towards modernization.

Some of the Indian IT companies have bagged some crucial deals under these schemes and have started setting up SBUs to tap the domestic market.

Also, increased emphasis on PPP in education and incremental allocation for ICT implementation in schools would benefit companies catering to the K-12 segment, including Educomp SolutionsBSE -1.79 % and NIIT. Overall, we expect the Budget to be neutral for the IT sector.

Automobile

1) Status quo on the excise duty front. Considering the fiscal consolidation drive that the government has undertaken over the last few months, there are talks of a possible hike in excise duty by the government. However, we believe that any hike in excise duty by the government at this juncture will be detrimental for the sector as it will suppress the demand.

2) No additional duty on diesel vehicles.

3) Sustained focus on infrastructure development.

4) Higher spends on NREGA and increase in agriculture sector outlay.

5) Increase in income tax slabs.