Is the Budget 2018 Good, bad, disappointing, lackluster or has Finance Minister Arun Jaitley taken a pragmatic approach keeping India’s long-term welfare in view?
Here’s what Industry leaders have to say…
S.Ravi, Practicing CA & Founding Partner – Ravi Rajan & Co and Chairman – BSE
The ‘Budget 2018 has emphasized the need for structural reforms with outlays focusing on rural economy and rural infra development at Rs.14.34 lakh crores, benefits to farmers by proposing to fix Minimum Support Price (MSP) at 1.5 times the market price, Rs.1 lakh crores outlay to be spent on revitalization of Education infrastructure and world’s largest health care programme covering 10 crore poor and vulnerable families. Recognizing the contribution of SME, the budget announcement of taxing companies with a turnover of up to Rs 250 crore at 25% is a welcome news. The proposal of a unified regulator for the International Financial Services Centre (IFSC) at GIFT City in Gujarat is a positive step towards efficient and effective regulation and supervision of the financial entities.
The impact of consolidation in the Public sector insurance space by merging United India Insurance, Oriental Insurance and National Insurance and then their listing as well as meeting Disinvestment target for 2018-19 at Rs 80,000 crore could prove vital for addressing the fiscal deficit of 3.3% of GDP for 2018-19. The revised estimate of 3.5 % for FY 18 is on expected lines as indicated in the Economic Survey.The announcement of long-term capital gains tax at 10% on equity gains of over Rs.1 lakh is something that came unexpectedly for the markets. However, if the economic fundamental is strong and the returns are great, it should not hurt the investment sentiments.
Shobana Kamineni, President, CII
“The Budget provides impetus to the sectors of agriculture and rural economy with many significant measures which will add to overall consumption and demand and boost growth. The support to MSME sector through lowering of the corporate tax rate to 25%, increase in access to finance, and addressing non-performing assets would help alleviate the stress in the sector…As in previous Budgets, the Finance Minister has introduced some innovative steps which will add comfort to citizens and strengthen key growth drivers.”
Dr. Niranjan Hiranandani, CMD Hiranandani Communities, and President (Nation), NAREDCO
Finance Minister Arun Jaitley has managed to balance populist demands, the need to support economic growth and Prime Minister Narendra Modi’s focus on fiscal discipline and reforms. From a real estate perspective, the Finance Minister said the government will establish a dedicated affordable housing fund in the National Housing Bank through various funding measures. This is a welcome step.
The Finance Minister’s mention of reducing hardships faced in realty deals was ‘positive’. It was also positive to see Suburban Railways in Mumbai find a mention in the budget, with Rs 11,000 crore of outlay. “Improved railway network and accessibility generally have a positive multiplier effect on real estate.
Targets of Swacch Bharat, rural electricity and LPG connections have been increased substantially, which is a positive. The Budget takeaway: Focus on ‘ease of living’ after ‘ease of doing business
A.K. Basak, Chairman, PLEXCONCIL
Plexconcil welcomes the key announcements with respect to the MSME sector because the majority of the plastics industry consists of MSMEs/ SMEs. The Plastics industry predominantly comprises the MSME businesses and the Rs. 3794 crores allocated in capital support and interest subsidy is sure to help the sector grow. Needless to say, this would encourage more of our trade members to explore the expansion of their businesses, thereby not only increase output capacities, technological advancement but also facilitate increased employment creation and skill enhancement. This move will also incentivize new entrants into the segment and help grow the industry sector as a whole. The stimulus to the growth of the manufacturing sector will also further boost exports. We feel that the incentives given to the Footwear, Leather and Textiles sector should also be extended to the plastics industry. The cut back on the Corporate tax to 25% for businesses with a turnover of up to 250 crores is also a welcome reprieve for many of our manufacturers who will now be able to utilize funds thus saved to reinvest in their own businesses and improve their manufacturing capacities to meet the increasing demands of the international markets. This will also stimulate job creation.
Priti Rathi Gupta, Managing Director, Anand Rathi Share & Stock Brokers
The FM did what was the need of the hour. Rural and agricultural reforms, infrastructure outlays, will help boost the economy.The capital markets will undergo some pain due to the LTCG being levied, but I see no major long-term effects as Equities remain to be the most attractive asset class in the coming years too. LTCG was removed when Securities Transaction Tax was levied, hence STT should have been reviewed/removed. Gold monetization and strengthening E-nam and agriculture markets, both spot and futures will be a big boost to the commodity markets.
It is reflective of being the last budget before elections and is set to meet the economic challenges as well. The fiscal deficit number is more than the market expectations, but it’s a calculated choice giving preference to growth and investment.”
Vikram Bapat, Partner, Grant Thornton India
“In this Budget, the government continues its focus on the Rural sector with enhanced spend on rural outreach. The announcement on affordable housing is a favorable one for the People of India. The impetus on Make in India continues with a policy on domestic defence production on the anvil. While the GST impact is yet to be assessed, tweaks in the customs rates on certain items, particularly in the auto sector will make domestic manufacturing competitive. Tax incentives on employment generation are extended to the footwear and leather industries besides textiles highlights the government’s focus on taking its Make in India agenda ahead.”
CS Makarand Lele, President, Institute of Company Secretaries of India (ICSI)
This Budget provides a huge opportunity for employment, skill development, Ease of Doing Business and leading towards achieving the motto of Prime Minister, Narendra Modi -“Sabka Sath Sabka Vikas”. The Indian economy will get a boost by providing relief to genuine taxpayers, small businesses, and young entrepreneurs. Overall initiatives of the Budget are outstanding and a right step towards the sustainable growth of the country, transforming into a new India with a global dominance.
The budget is largely focussed on uplifting the agricultural sector, along with a major push to healthcare and education sectors in the country. In a major push to provide healthcare, the world’s largest health protection scheme for 50 crore Indians has been announced.
This is the first budget after the rollout of the Goods and Services Tax (GST) and the budget proposals primarily focus on customs. The changes proposed in customs duty aim to create more jobs in the Nation. They also seek to incentivize domestic value addition and Make in India for various sectors including food processing, electronics, auto components, footwear, and furniture. The Budget proactively focuses to smoothen dispute resolution processes and to reduce litigation under Customs.
Khushru Jijina, Managing Director, Piramal Finance & Piramal Housing Finance
The Union budget 2018 was a pragmatic one and focused on fortifying the economy as a whole. The Government’s endeavor to provide housing to every poor citizen by 2020 through the establishment of a dedicated affordable housing fund in the national housing bank, along with priority sector status being granted, is a commendable one. The government assuming ownership of NHB from RBI is also positive as it would translate into the focus of NHB shifting from regulation to development.
The reduction of the GST rate from 12% to 8% on affordable and low-cost housing units last week was a welcome reform. Building 31 lakh homes in 2018-19 in urban areas and a further 51 lakh in rural areas will go a long way in addressing primary housing demand. Overall, the strong economic impetus provided in the budget will ultimately boost housing and real estate. The introduction of long-term capital gains tax at 10 percent on equities will also have an indirect impact on making an investment in real estate (over listed stocks) more attractive than before. Tax breaks being granted to senior citizens and salaried employees will increase their disposable income available for making capital purchases. A push on infrastructure comprising public investment in the rural areas, agricultural marketing, urban connectivity, particularly Metros etc will also multiply investment prospects for real estate sector.
Ashwin Damera, Executive Director, Emeritus Institute of Management
The announcements in the Union Budget 2018 that technology will be the biggest driver in improving quality of education is a welcome one and, we believe, will provide an impetus to edtech players to partner the Government in its endeavor. The allocation of Rs. 1 lakh crore towards revitalization and up-gradation of education sector, listing out all the new educational and training institutes that the government aims to introduce and the move to promote learning-based outcomes and research are steps in the right direction to advance the quality of education, and thereby the quality of the manpower
Surendra Hiranandani, CMD, House of Hiranandani
I would term it as a pro farmers budget with a slew of measures well directed towards improving productivity in agriculture. With the increase in MSP for crops, thrust on organic farming, doubling the expenditure allocated to food processing sector, liberalization of agricultural exports, creating state of the art facilities at food parks, push to fisheries and allied sector, measures for senior citizens, this budget truly focused on uplifting the life of the “Aam aadmi”. The introduction of various schemes in these areas will certainly bridge the rural-urban divide in the future. The announcements in the areas of healthcare, in particular, are path-breaking and will empower the poor and underprivileged sections of the society. While there was no direct benefit to the real estate sector from the budget, some measures announced will positively impact the sector.
Tushad Dubash – Director, Duville Estates
Budget 2018-19 focus on infrastructure and the Smart Cities initiative is a positive move for the real estate sector and Pune in specific. The Smart Cities Mission is an ambition to develop 100 cities across India that would also harness the Information Communication Technology (ICT) capabilities. Pune comes under the governments Smart City initiative and the allocation of Rs. 2.04 lakh crore towards the listed 99 Smart Cities will serve well for Pune’s real estate market. Pune’s real estate is one is the lesser impacted markets in comparison to the other key cities and have proved to be one of the more resilient markets in the country. Unlike other metros where buyers have demonstrated a strong preference for ready-to-move-in apartments, in Pune, there has been a steady skew to in terms of interest in under-construction projects. It is important to note that strong Real Estate has had a steady momentum in terms of inventory off-take and that the excellent infrastructural connectivity has definitely lent a positive slant to sustaining the current momentum especially in some of Pune’s micro-geographies which have withstood the onslaught of a decline in prices due to the impact of de-monetization, RERA, and GST. Combining Pune’s growing infrastructure along with the sustained demand will boost Pune’s real estate market further. Infrastructure is a growth driver for the country and the budgets focus on infrastructure and connectivity will have an impact on not only the real estate sector but the economy on the whole.