Finance Minister Arun Jaitley presented the Union Budget in Parliament on Thursday.
We present here some reactions:
Marginal reduction in excise duties in the food processing sector is welcome: Sanjay Kaul, MD & CEO, NCML
The expectation that there would be a special thrust to the agriculture and food sectors in the Budget has been belied.
There has also been no policy shift to signal greater engagement of the private sector and attract investment in this vital sector.
It is also surprising that the Finance Minister did not announce any short term measures to tackle food inflation.
It had been expected that there would be immediate intervention on the supply side by announcing release of grains in the open market and import of pulses and edible oils to soften prices.
The determination to deal with spiralling prices does not appear to have been a priority for the government.
However,the marginal reduction in excise duties in the food processing sectorand extension of the Nabard RIDF loan scheme for warehousing infrastructure is welcome.
The announcement of engaging with states for opening private agricultural markets, restructuring of the FCI,and moving towards a National market are also welcome steps.
Overall a very mature budget: Ashishkumar Chauhan, MD & CEO, BSE
The Financial Ministry has done an excellent job despite having only 6 weeks to prepare his first Budget.
The biggest positives have been containing fiscal deficit to below 4.5% and 3.6% in the next and GST implementation time frame.
There have been many details but the deft touches relate to SLR/CRR not being applicable to infrastructure loans, extension for power plants starting to produce before 2017 to have 10 year tax holiday, Rs 10,000-crore (Rs 100-billion) SME fund, deepening of currency and bond futures market, uniform KYC for financial markets, single demat account.
Overall, big picture looks good and he has managed to make his mark in the history of Indian budget presenting in his own subdued and mature way.
Opportunity for investors to look at infrastructure, banking, real estate and capital goods sectors: C Parthasarathy, Chairman, Karvy Group
In appraising the first Budget of the new government, it would beinstructive to keep in mind the context and the background in which it has been presented.
It comes when the government barely two months in office.
It also bears the PM’s imprint in the sense that it focuses on his election-pitch themes of reviving manufacturing, spurring job creation, and simplifying life for investors and entrepreneurs alike.
The accent on small and mediumenterprises, and the idea to create to Rs 10,000 crore (Rs 100 billion) venture capital fund for small and young entrepreneurs has the unmistakable signs of an entrepreneurial Gujarati mind at work!
Mr Jaitley’s maiden Budget focuses on four big macro challenges facing the Indian Economy:
- Getting the country back to high GDP growth through focus on Infrastructure growth revival
- Keeping inflation at low levels by addressing supply side issues
- Reverting to fiscal prudence by providing a clear roadmap for fiscal deficit reduction
- Building investor confidence and address the issue of rejuvenating job creation
The focus is clearly to cap less productive expenditure on various subsidies and use the incremental governmental revenues for boosting infrastructure and consumption growth.
From a stock market perspective he throws up an opportunity for investors to look at infrastructure, banking, real estate and capital goods sectors.
The FM has mentioned that the capitalisation of banks to meet Basel 3 norms would be done through funds raised by divesting government’s large holding in PSU banks to the investing public.
Add to this, the disinvestment target of Rs 63,000 crore (Rs 630 billion) is certain to keep the Indian capital markets buzzing and provide excellent buying opportunitiesfor the retail investor.
The increase in income tax exemption limit under section 80C from Rs 100,000 to Rs 150,000 and raising the threshold of taxable income to Rs 250,000 will boost retail savings and consumption.
The maiden budget clearly addresses three vital aspects of economy: Adhering to fiscal discipline, boosting Investment climate and reviving growth: Dr Nirakar Pradhan, Chief Investment Officer, Future Generali India Life Insurance
"The maiden budget of our new Finance Minister clearly addressed threevital aspects of economy: adhering to fiscal discipline, boosting investment climate and reviving growth.
• Despite the challenging macro environment, the FM has kept the Fiscal Deficit within 4.1% for FY 2014-15 as envisaged in interim budget in February 2014.
• He has raised personal income tax exemption level from Rs 2 lakh to Rs 2.5 lakh, hiked interest rate deduction limit on home loans from Rs 1.5 lakh to Rs 2 lakh and increased investment limit under Sec 80 C from Rs 1 lakh to Rs 1.5 lakh. This will help in channelising household savings for industry, infrastructure and housing. Also hike in FDI limit in Insurance and Defence sector from 26% to 49% would bring in much needed long term capital to respective industry.
• Incentives for REIT, benefits for long term infrastructure loans and allocation of Rs 37,000 crore towards road projects etc are measures to revive real estate and kick-start infrastructure projects."
Giving CSR status to slum redevelopment and pass-through status to REITs are welcome announcements: Hari Prakash Pandey, VP-Finance & Investor Relations, HDIL
Giving a CSR status for slum redevelopment programmes and pass-through status to REITs, are two major announcements by the finance minister that will strongly help in the revival of the real estate sector.
Plan to incentivise development of low cost housing, raising of Income Tax exemption limit, deduction of interest on self occupied properties, allocation of Rs 8,000 crore for National Housing Bank programme for development of rural houses, will create a favourable environment that will boostaffordable housing in the country.
Plans to build 100 new cities, streamlining of tax administration with the launch of GST, revival of SEZs and creation of industrial smart cities are other welcome announcements.
A well balanced growth-oriented budget: Nirakar Pradhan, CIO, Future Generali India Life Insurance
In a challenging macro environment marked by decade low growth and high inflation, the new Finance Minister has presented a well balanced growth oriented Budget.
The noteworthy positives include sticking tothe challenging fiscal deficit target of 3% by FY2017, hiking FDI limit in Insurance and Defense sectors, providing incentives to REIT and long term infrastructure loans.
Increase in long term personal investment limit from Rs 1 lakh to Rs. 1.5 lakh and hike in exemption limit for interest on housing loan from Rs 1.5 lakh to Rs 2 lakh will channelise household savings to productive sectors of the economy.
Finally, keeping the government borrowing figures similar as interim budget and trying to address issues related to FII investments augur well for both debt and equity markets.
Expect Defence, Real Estate and Power stocks to do well: Raghu Kumar, Cofounder, RKSV Broking
From an overall perspective,prudence is what comes to mind when describing the Union Budget.
While there were no major announcements on any specific sector, therewere announcements of schemes across most important sectors with manysmall concerns being addressed.
In short, if you had to focus on whatareas what were focused on the most, infrastructure and taxation wereheavily addressed.
From an infrastructure perspective, we can expectdefense stocks to do well (L&T has appreciated 3% mid-day), realestate stocks to do well (DLF has appreciated 9% so far through theday), and Power stocks to do well (NTPC has risen 2% so far).
Additionally, the FM did a good job in ensuring that economic indicators like Current Account Deficit and Inflation were brought up to address the economy from a macroeconomic level and ensuring that the government would be fiscally responsible.
Finally, he addressed many topics that were brought up before the budget -- such as ensuring housing for all by 2022 and covering insurance for a larger percentage of the population.
However, there was not much clarity on the implementation of the schemes and initiatives.
That being said, because the Budget covered so many different areas, it is in line with Mr. Modi's plan with keeping euphoria and spirits high in the country.
Budget to boost global investor sentiment and may improve the capex cycle: Rajesh Laddha, CFO, Piramal Group
A pragmatic and balanced budget. The new government has probably tried to balance the fiscal deficit restrictions vis a vis the push to be provided to the ailing economy.
On one side the Finance Minister has tried to contain the fiscal deficit to about 4 per cent level, where as on the other side he has tried to provide boost to initiatives like job creation, infrastructure, higher FDI and domestic investments, industrial development, better healthcare and education etc.
He has also tried to provide support to agriculture and warehousing to improve the supply and storage of agricultural products.
The main focus of the budget seems to be higher growth and job creation through support of PPP programs and more investment through FDI and domestic savings.
The government has also demonstrated that it wants to promote use of newer technology whether it is use of broadband or solar energy.
The budget has also tried to provide the inclusive growth through development of underdeveloped regions e.g. Northeast and J&K.
It has also provided for development of underprivileged section of society.
1. Thrust on Infrastructure with
• Allocation of Rs 38,000 crore for new highways
• Proposal for new airports for tier 1 and tier 2 cities
• Allocation for new port projects
• Push for renewable energy projects
• Proposal for additional 15,000 kms of oil pipeline
• Provision for Internal water transport through rivers
• More PPP projects
• Dedicated freight corridors etc
• Providing coal to existing power plants
2. Increase in FDI to get more capital from outside
• 49% in Insurance
• 49% in defence
3. Promote Industry and more job creation
• By setting up National Industrial Corridors
• By creating Industrial Smart Cities
• Additional investment allowance for investment in plant and machinery
4. Personal Income Tax for Common man
• Taxable Income limit increased from 2 lakhs to 2.5 lakhs
• Taxable Income limit for senior citizens increased to 3 lakhs
• Housing loan exemption limit increased
• 80 C limit increased from 1 lakh to 1.50 lakhs
5. More focus on Education and Health
• Sanction of more IIMs and IITs
• More hospital in form of AIIMS
6. General Provisons
• Introduction of New Accounting Standards in line with IFRS by FY 16
• Implementation of GST during current Fiscal year All above measures will help boost the global investors’ sentiment and may improve the capex cycle going forward.
However, much needs to be seen when the real implementation starts.
Budget announcements in line with the Insurance Industry demands: Sandeep Ghosh, MD & CEO of Bharti AXA Life Insurance
The announcements by the Finance Minister as part of his budget speech have been in line with what the Insurance Industry has been asking for from the new government.
We welcome the move to increase the composite FDI in insurance to 49%.
It is a significant step in the right direction.
However, we need to wait for the Insurance Bill tobe presented and passed in the parliament for this to become areality and yield the expected results.
The move to increase the 80C investment cap to Rs 1.5 lacs from the current Rs. 1 lacs willdefinitely give a boost to the Insurance Industry.
It will encourage people to invest in long term savings instruments like life insurance.
Budget encourages long-term investments in debt mutual funds: Sandesh Kirkire, CEO at Kotak Mutual Fund
The increase in the 80C limit enhances tax incentive for potential retail investors to invest into equities mutual fund.
The increase in the long term capital gains tax rate from 10 to 20% and the tenure from 1 to 3 years (for the debt mutual funds) leads to the closure oftax arbitrage.
This directs the energies of the mutual fund industry from short to long term; and towards more stable investible inflows.
The arbitrage available while calculating the dividend distribution tax has also been removed.
Overall, I believe the finance minister is trying toprepare the investor for a long-term and more objective approach towards the mutual funds: which is more investments and less tax arbitrage.