India Inc Calls It As 'Overall Good' Budget

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Finance minister Arun Jaitely’s Union Budget 2018 is appeared to be more populistic as the government looks more focussed on the general election next year. Though the recommendations are mostly repeat of the previous year’s, the government has tried to make it appealing to the rural and farming sector. The emphasis to healthcare programmes is being considered a s positive step. The industry and corporate leaders, including sectoral consultants, have reacted to it saying an overall good Budget.  

Tata Steel managing director and CEO T V Narendran called the Budget as a balanced and positive one.

“The finance minister has presented a budget which is both balanced and positive. Focus on rural infrastructure, agricultural output and farmer income will help reduce the agrarian distress and boost the rural economy,” he said.

While emphasis on health, education and employment generation would promote inclusive growth, higher spending on infrastructure with a focus on airport capacity expansion and transportation especially de-bottlenecking of the railways will definitely boost steel demand as will the focus on affordable housing, he said.

“We also believe that the spending on infrastructure will further help reduce the cost of doing business as it will drive greater efficiencies in logistics,” Tata Steel chief said.

Satish Reddy, chairman, Dr Reddy’s Laboratories, said that the government’s focus on rural development and agriculture is a welcome step. The long overdue emphasis on our rural economy and agriculture will stimulate demand. “The announcement of the Aayushman Bharat program for healthcare is a game changer and the coverage of ten crore people under the National health protection scheme is commendable. This will give an impetus to healthcare benefits for people in the most deserving sections of society,” he added.
Akhil Bansal, Deputy CEO, KPMG India, said that 2018 Budget strives to uplift economic growth by modernizing agriculture, revamping education system and providing better health coverage.

“It aims to achieve all this with a minimal deviation in the fiscal deficit target. The proposal to provide health protection up to Rs 5 lakh is one of the notable features of this budget, which could pave way for the creation of a healthy India. While the increase in allocation for infrastructure will have a large multiplier effect on the economy as well as private investment, the reduction in the corporate tax rate for firms with a turnover of up to Rs 250 crore will go a long way in making them more competitive,” he said.

Bansal added that emphasis on fostering horticulture clusters, organic farming, and agriculture exports is commendable. Micro-entrepreneurs will benefit from the 23 per cent growth in MUDRA target. “The dedicated fund for affordable housing will provide a real thrust to the construction sector, which is one of the largest employers in the country. In short, there is a clear attempt to nurture all facets of a new, transformative India without compromising on fiscal prudence,” he added.

India head of International Air Transport Association, Amitabh Khosla said;  “We welcome the focus on airport infrastructure capacity announced in the Budget. In our 20 year passenger forecasts, IATA anticipates India will become the 3rd largest aviation market by 2024. But this is by no means guaranteed. To make this a reality, airport capacity in India needs to be augmented and expanded quickly. IATA has earlier recommended and is supportive of leveraging AAI’s balance sheet for infrastructure creation and expansion.

But the big question mark on capacity, and a critical area of concern for IATA , continues to be about Mumbai airport. Navi Mumbai airport is still a distant dream. In the meantime, Mumbai continues to fall behind in aviation activity, and Maharashtra state is unable to maximize the economic potential that can be delivered by aviation. We urge the government to urgently look at innovative approaches to bridge the infrastructure shortfall.”

Vijay Thadani, Vice Chairman and MD, NIIT Ltd commented that it is a progressive budget with the right emphasis on training of teachers, use of technology and funding for research.

Among the positive steps for the education sector, revitalising Infrastructure and Systems in Education (RISE) by 2022 with a total investment of Rs 1,00,000 crore in next four years stood out. The fact that the Higher Education Financing Agency (HEFA) would be suitably structured for funding this initiative is a much appreciated provision, he said.

While, increase in digital intensity in education and envisaging move from ‘‘black board’’ to ‘‘digital board’’; using technology to upgrade the skills of teachers through a digital portal “Diksha”; national program on artificial intelligence under the aegis of Niti Aayog; mission on Cyber Physical Systems and a test bed for 5G technology at IIT Chennai were also encouraging initiatives, he said.

Glenmark chairman and managing director Glenn Saldanha viewed the Budget as moderate.

“While the finance minister has presented a moderate budget, he continues to lay emphasis on overall infrastructure development and strengthening of the rural economy. The increased focus on healthcare augurs well for citizens of the country.  On the corporate side there are no significant changes or announcements, which was expected,” Saldanha said.

Khushru Jijina, Managing Director, Piramal Finance & Piramal Housing Finance, said that the Budget was 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 per cent to 8 per  cent 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 per cent on equities will also have an indirect impact on making 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, Khusru added.

Deliotte India managing partner (tax) Vipul Jhaveri said that the government’s agenda of ‘Transform, Reform and Perform’ in the budget focuses on implementation of the recent reforms.  Hence there are no big bang announcements.  The budget addresses needs of agricultural sector and MSMEs, through which agenda of inclusive growth, formalization of economy and boost employment generation is targeted to be realized. The FM’s promise of reducing corporate tax rate from 30 percent to 25 percent for companies remains limited to the MSMES leaving the large tax payers to wait for another year. However, 99% of MSME’s with turnover of upto Rs 250 crores would benefit from the rate reduction. Unfortunately, the large corporates will now carry a slightly higher tax burden from an increase cess of 1 percent.  Rationalization of Long term capital gain taxation may be inopportune in terms of timing as their ability to raise funds through IPOs and FPOs may be impacted due to market sentiments changing.  

“There are two announcements which will impact the healthcare delivery industry. The  Suraksha Bima Yojana enhanced limit of 5 lakh rupees per family is yet to be launched, so the details and capital allocation will only be known when it is launched,” said Zahabiya Khorakiwala, MD, Wockhardt Hospitals group.

However, the intent is quite positive, as almost 40 per cent of underprivileged population would be able to access the secondary and tertiary care healthcare, and this would increase the market size for healthcare providers radically. The second scheme is for 1.5 lakh healthcare centres, where the budgetary provisions are only 1200 crore.

The investment in hospitals is a subject matter of viability, so it is yet a bit premature to assess the investment potential of the schemes announced. However, if the prepositions are commercially viable, these would be opening a vast market for the investments to flow in,” she added.                        

Quote by Bhavin Patel, founder and CEO, LenDenClub, viewed it as an encouraging Budget as far as digital technologies are concerned.

“Government is highly focused on the growth of Digital economy, thus encouraging acceptance and growth of digital platforms like P2P lending platforms. Additionally, the internet penetration in rural India will enable us to create an understanding of lending/ borrowing amongst the rural population, while promoting the digital drive in the rural India,” he said.

Government’s receptiveness towards encouraging the use of new technologies like Blockchain in the payments sector will further revolutionize the finance segment altogether. The efforts towards creating the right environment for Fintech companies to grow in India will bring in promising growth prospects for P2P lending platforms, he added.

Dhirendra Singh, Chairman, Manpasand Beverages, said that  with the union budget 2018, the government has shown a commitment towards reviving rural economy.

“Measures such as increasing farmers’ income and doubling investments in food processing sector will have a positive impact on industries that are connected to agriculture and allied sectors. The budget proposes to adopt a cluster approach for agriculture and it is a welcome move which will lead to better connectivity of produce and markets. By promoting agro-processing and agri-logistics, the Govt. has provided a fertile ground for streamlining and formalising the supply-chain sector. This will lead to direct linkages between farmers and food processing sector. A 100% tax reduction for the likes of farmer producer companies is a welcome move as it will bring in more players in the business of post harvest value addition,” Singh added.

Arvind Mediratta, MD and CEO, Metro Wholesale, India, called the Budget as socially inclusive.

“Overall, the budget is a socially inclusive one that has laid major emphasis on agriculture, social infrastructure, healthcare, social protection and digital transformation.

The government has taken some measures in this budget towards strengthening the SME and MSME sectors. The Corporate tax rate reduced to 25 per cent  for companies with turnover up to Rs 250 crore in the financial year 2016-17, will also majorly boost the micro and small and medium business eco-system. This will augment the ease of starting own businesses while helping existing business also.

In the backdrop of agrarian stress, the budget announced by the government has shown its resolve in continuing to provide resources to rural India. With 2000 crore corpus for Agri-Market Development, support to organic farming, allocation of 10,000 crore to fisheries and animal husbandries related infrastructure; these measures will help in augmenting farmer’s income, improve the quality of farm produce, and employment for the farming community, Mediratta said.

IFFCO managing director U S Awasthi welcomed the Budget saying it is  path breaking.  “It has given the much needed impetus to the Agriculture sector, the backbone of Indian economy,” he said.

Allocations such as Rs 500 crore for Operation Green, corpus of 10,000 crore for Fishery and Aquaculture Infrastructure Development Fund and Animal Husbandry Infrastructure Fund, Rs 11 lakh crore for institutional credit for farm sector among others would definitely help farmers of the nation to get the necessary funding. Policies such as implementation of MSP for all crops; being hiked to 1.5 times of production costs, linkages of APMCs with ENAM and aim to develop 22,000 Gramin agricultural markets and liberalisation of agricultural products export will boost up help farmers morale with more incomes at their hands and help in the growth of agrarian economy. Making Direct Benefit Transfer a reality would also provide the farmers the much required flexibility in terms of money, choice and decisions.

Technology has always been an enabler. One lakh gram panchayats have already been connected through broadband. Focus on linking more villages through broadband and creating hundreds of wifi spots to make internet available to households in rural areas too augur well for fast tracking of the development process. Programmes such as Ujjawala Yogna, Saubhagya Yojana, will help in the overall living standards of these people. Further, 100% tax deduction for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above would help attract more companies to enter into farm producing, he said.

Vishal Beri, Hinduja Healthcare Surgical, said; “The promise on health spending with the Government’s 2018 budget announcement has displayed a continuity of thought. The flagship National Health Protection scheme seems to be one of the largest benefit programmes, and a milestone towards achieving greater affordability and accessibility, when it comes to healthcare.

The newly announced “Health Protection Scheme” seems like a bold move and a big step towards Universal Health Coverage.  However, as with previous schemes, the key remains successful execution and minimization of leakages.

The Government’s idea to set up 24 new medical colleges and hospitals, by upgrading district level ones, will help address the shortage of skilled medical professionals, albeit only over the medium term. Overall, it is a pursuit which will bring healthcare closer to every household,” Beri said.

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