Modi Government brought in a lot of cheer for the aviation companies; share prices shoot up

The Modi government is known for delivering and extending benefits to the Aam Aadmi and essential sector – recently, it brought in a lot of cheer for the airline industry – something which will further benefit the flyers.

The Modi government announced a cut in excise duty on Aviation Turbine Fuel (ATF) from present 14% to 11%. This is to counter the alarmingly increased prices of fuel. The rate will be updated from tomorrow and will also be effective from tomorrow.

The contrasting news is that the government has increased the customs duty to 5% from the former 0%. The excise duty cut has brought in the cheer for the oil companies. The customs duty increase is driven by an aim to balance the pressure of the current account deficit. The other factors playing its mess are the depreciating rupee and the rising oil prices.

Recently the airline companies are in losses and the losses are quite significant. A part of these losses is due to the high customs duty. But thanks to the Modi Government, the rates have been brought down and rendered a huge relief to the companies.

In anticipation and after the announcement, the scripts of aviation stock shares- it almost rose to nearly 14% on an intra-day basis. Here are the individual stocks stats:

Jet Airways – 13.8% up,
SpiceJet – 8% up
InterGlobe Aviation – 6%up

Recently many states including Rajasthan, Madhya Pradesh announced a 4% rate cut in the VAT rate. The Central government also took the leap – it asked thye marketing companies to bear the loss of Rs 1 per litre and it has also reduced its own rate.

Amid the disturbing economic conditions, the government has been warned by the Moody’s of fiscal slippage. This came in after the government decided to cut the tax rate on oil. The government is of the view that India is less struck by the slowdown in the global economy – it is still in better hands.

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